Blowing the whistle on corruption in sports

Aldo Rebelo, John Githongo, Andrew Jennings, 10th IACC, Workshop report, Private Sector

Chair:
Jeremy Pope, Executive Director, Transparency International-Secretariat, London, United Kingdom

Panellists:
Aldo Rebelo, Congressman, Brazil
- Nike Enquiry
John Githongo, Executive Director, Transparency International Kenya
- The Case of the Kenyan Football Federation Accounts Inspection
Andrew Jennings, Freelance Investigative Journalist, United Kingdom
- How We Lost Sport

Discussants:
Francois Werner, Special Representative, International Olympic Committee Commission of Ethics, Switzerland
Jeremy Pope

The greatest part of the workshop consisted of detailed presentations by the panellists.

Contribution by Aldo Rebelo

Nike Enquiry

Football is very popular in Brazil, but is also a multi-billion USD business. Some players are very rich, while most of the clubs are bankrupt. The sports equipment manufacturer Nike is sponsor of the national soccer team, but also has individual contracts with the players and the coach of the national team himself.

That system seemed to please many people, until in the 1998 World Cup final game in France, the national football team suffered a traumatising defeat, where Ronaldo played despite an epileptic attack a few hours before.

The contract of the national soccer team with Nike had been kept confidential until Juca Kfouri, an investigative journalist, managed to get a copy of it. In the document, Nike is given the prerogative to determine 50 games over 10 years that the national Brazilian soccer team should play. That includes determining the timing, the location and the opponent. Also, and literally at the source of the scandal, the contract gives Nike the power to decide in all matches 8 of the main players on the field, making of Nike practically the coach of the team.

A congress committee was established to investigate the case further. New irregularities, particularly disadvantageous to the Brazilian Football Federation, came to light in the context of the responsible courts in the case of a law suit between the two parties. The Commission also found out that the Federation had subscribed to a USD39-million loan, which involved the payment of USD11-million in interest rates. The president of the federation was also found to have several million dollars worth of undeclared property.

While such million-dollar dirty business is taking place, 90% of Brazilian football players earn less than USD 100 per month. Many of them emigrate to Europe for better pay, often being traded like exotic animals, not being able to adapt to the new country where they cannot speak the language. They are also poorly paid, live illegally or with false passports, sometimes being criminals to earn a living. Request have been made to FIFA to forbid the transfer of under-aged players, but the current system that gives the possibility for European clubs to get new players practically for free and without any contractual obligation, is not disadvantageous to all.

Contribution by John Githongo

The Kenyan case

Important points to note:

  • Football teams have come to TI, seeking help for the mismanagement of the National Federation. TI offered to raise the funds necessary for the production of the audit, while FIFA would disaccredit the Kenyan Football Federation, were the government to intervene.
  • The role of the press was key in putting pressure on the federation.
  • The social importance of soccer in Kenya is tremendous. It is also used by politicians as a stepping stone to national politics, a link that needs to be broken.

Contribution by Andrew Jennings

How We Lost Sport

Beyond the many scandals described in his paper, Mr. Jennings also addressed problems of conflict of interests in the international football association (FIFA), where officials involved in awarding contracts sometimes receive them.

Elaborating on John Githongo's presentation, Jennings emphasised that the oversight and, if necessary, prosecution by regulating institutions should also apply to national and international sports federations.

Main Themes Covered

  1. The importance of sports worldwide in terms of popularity and social function (making it political) and the extremely large amounts of money involved
  2. Forms of corruption:
    • the relationship between business and sport (Nike enquiry: impact of international business corporations)
    • the relationship between international and national sport federations (Kenyan Football Federation and FIFA)
    • bribes accepted by IOC members during the process of selecting the cities to host the Olympic Games (IOC)
    • lack of transparency in the IOC reforming process, with a lack of legitimacy as a result
    • conflicts of interests of FIFA, where officials involved in awarding contracts sometimes receive them
  3. The lack of transparency in financial transactions of national and international sports federations, the absence of accountability systems and of monitoring authorities
  4. The role of the press in raising the issues of transparency and accountability in sports

Main Conclusions

  1. Sport has a potential role as a help for development, a liberator from poverty. But there's the danger that people's passion can be hijacked by malign interests.
  2. The necessity for national and international sports federations to be made legally transparent in their contracts and financial transactions, and accountable towards external bodies and particularly governments and their institutions.
  3. The need for international laws regulating the current informal economy around transfers
    - some view this as trafficking - of players from developing countries, addressing their social rights. More particularly, the interdiction of international transfer for underage players, unless socially acceptable standards are met.
  4. The following areas of reform and cooperation have been suggested to and acknowledged by the IOC Ethics Commission representative:
    • Requiring cities bidding to host the Olympic Games to seriously engage in measures which would avoid corruption in public procurements around the Games, possibly considering TI's Integrity Pact's model.
    • For the IOC Ethics Committee to cooperate with external ethics experts in order to improve accountability and transparency mechanisms within the IOC.
    • For the IOC Ethics Committee to work together with TI in talking with the sports sponsors towards the drafting of a code of conduct for such major sponsors.
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