Monday 2 November 2015
In May 2015, the Fédération Internationale de Football Association (FIFA) announced its 2014 operating results. With 2014 revenue of over 1.9 billion Swiss francs (208 billion KES, 7.4 billion Ghanaian Cedi) and profits of over 136 million Swiss francs (14.7 billion KES, 525 million Ghanaian Cedi), FIFA was anticipating an enormously successful annual Congress in Zurich on May 28 and 29, 2015. That Congress, however, was rocked by the arrest of seven FIFA officials by Swiss law enforcement and a series of subsequent announcements including:
- The indictment of 14 FIFA officials on criminal corruption charges by the U.S. Department of Justice.
- Swiss prosecutors launching a criminal investigation into the awards of the 2018 and 2022 World Cups to Russia and Qatar.
- A Swiss criminal investigation of Sepp Blatter, president of FIFA, on suspicion of criminal mismanagement and suspicion of making a "disloyal payment" of 2 million Swiss francs (214.7 million KES, 7.6 million Ghanaian Cedi) to Michel Platini, the heir apparent to FIFA's presidency.
These astonishing events shocked the world of football and eventually forced Blatter to resign the FIFA presidency. Sometimes described as the most powerful man in world sports, Blatter led FIFA during a 17-year period when football achieved globalization on an unprecedented scale - as evidenced by FIFA's revenues exceeding 5.2 billion Swiss francs (558.2 billion KES, 19.9 billion Ghanaian Cedi) in the 2011-2014 World Cup cycle. In fact, some observers had referred to Blatter as untouchable. But the expanding investigations of FIFA demonstrate that Swiss, U.S. and other authorities are bent on uncovering corruption at FIFA - no matter how high the investigations may lead.
How will the FIFA investigations impact future corruption investigations involving senior and middle level government officials?
The FIFA investigations may herald a new willingness of law enforcement authorities to attack public sector corruption at the highest levels, using enhanced cross-border cooperation that has been often discussed but seen rarely in practice. As if to underscore the changing law enforcement environment, Ms.Diezani Alison-Madueke, Nigeria's oil minister from 2010 to 2015, was arrested on suspicion of bribery by the United Kingdom's National Crime Agency (NCA) on October 2, 2015. According to the NCA, Ms. Alison-Madueke and four other people were arrested but not charged by the NCA's International Corruption Unit on suspicion of bribery and money laundering.
Like Sepp Blatter's stature within FIFA, Ms. Alison-Madueke was previously described as one of Africa's most prominent politicians. She was not only the first woman appointed to run the Nigerian oil ministry, but also held the rotating presidency of OPEC until the March 2015 Nigerian elections led to Muhammadu Buhari taking office as the new president in May. According to Al Jazeera, "In a sign that the arrest had been coordinated with Nigerian authorities, the financial crimes unit sealed one of Alison-Madueke's houses in the upmarket Asokoro district in the capital Abuja, two security officials said."
Although two instances of material cross-border cooperation directed against top level officials suspected of financial wrongdoing cannot be characterized as a trend, it is notable that the officials' high profiles did not deter law enforcement from announcing the investigations and arrests. Furthermore, it seems that the degree of cross-border collaboration in these cases went beyond information sharing to encompass coordinated arrests or indictments and property freezes. And even though authorities are currently divulging little about the investigations, what has been announced indicates information sharing that exceeds "customary" cooperation levels among national anti-corruption agencies.
With this background, what conclusions can be drawn concerning future global anti-corruption activities? If actual (as opposed to stated), intensive collaboration continues among law enforcement agencies in developed and developing countries:
- Officials formerly believed to be beyond the reach of the law will be surprised to find that funds deposited in offshore accounts are not immune from scrutiny.
- Corruption investigations will involve multiple agencies working in concert to track deposits and distributions from foreign and domestic bank accounts.
- Money laundering charges will increase, as officials taking bribes use various schemes to attempt to access ill-gotten gains in ways they believe are less likely to be detected.
- Corrupt officials may not be charged or arrested in the country in which they work, but being charged or arrested in other countries will lead to a greater likelihood of domestic prosecution or extradition.
Investigations of prominent officials such as Sepp Blatter, the indictment of other high-level FIFA officials, and the arrest of former Minister Alison-Madueke can be expected to impact government and other officials in several other ways. First, those officials who are offered bribes may realize that taking a bribe will not assure the funds are available for later use. Put another way, if an official begins to fear that taking a bribe is more likely to be discovered - or the funds frozen - the official may decide that honesty is indeed the best policy. The official who fears discovery is even more likely to fear prosecution, a reminder of the deterrent effect of high-level prosecutions. Companies also will realize that international collaboration in tracing funds deposits and transfers increase the odds that corrupt officials will be exposed, meaning that the companies which pay bribes are more likely to face civil or criminal prosecution. Therefore, governments and companies have a compelling interest in adopting and implementing comprehensive anti-corruption policies and internal controls, and ensuring that those policies and controls are monitored and enhanced as part of their risk management programs.
If you would like to find out more information about the measures your entity can take to mitigate fraud and corruption exposures, and how to enhance governance and best practices, please note that IASeminars offers the following events: