Avoiding FIFA’s Footsteps
The 2016 Summer Olympics and what companies need to know about operating in Brazil during one of the biggest sports events in the world.
The Games will arrive to Brazil against the backdrop of a prior International Olympic Committee (“IOC”) scandal and two separate, wide-ranging and ongoing corruption scandals. Domestically, the Petrobras Lava Jato scandal has resulted in the arrests of dozens of executives and political leaders, and caused widespread ripples in Brazil’s economy. Internationally, the investigations into the Federation Internationale de Football Association (“FIFA”), most notably by the U.S. government, may have implications for those involved with the 2014 World Cup in Brazil. Collectively, these scandals are instructive to global companies regarding the corruption-related risks of doing business in Brazil and elsewhere. This article addresses the background of the IOC and FIFA scandals, the corruption-related risks associated with the 2016 Summer Olympic Games in Rio, the law enforcement authorities responsible for spearheading investigations into corporate corruption, and practical takeaways for companies facing corruption-related risks.
The IOC Example
The International Olympic Committee (“IOC”) is no stranger to corruption. In 1998, allegations emerged that some members of the IOC had accepted bribes in exchange for voting that the 2002 Winter Olympic Games be awarded to Salt Lake City. In the wake of that scandal, ten members of the IOC were expelled from the organization, and the IOC implemented corrective reforms regarding the bidding process and transparency within the organization. In anticipation of the 2016 Summer Olympic Games in Rio de Janeiro, IOC President Thomas Bach reminded IOC delegates about their responsibility to remain transparent and adhere to IOC’s values. President Bach has further announced that the IOC will disclose all IOC financial details, including where the organization’s revenue originate and are distributed to; that the IOC will separate its audit and finance functions; and that the IOC will appoint a chief ethics officer. In explaining these changes, President Bach noted, “Sport does not operate in isolation from the rest of society. We are living in the middle of a modern and diverse society that holds us accountable for what we do.”
The FIFA Example
The FIFA scandal erupted on May 27, 2015 after 14 high-level individuals (nine current and former FIFA officials, four sports-marketing executives, and a broadcasting business executive) were indicted in the United States on federal charges of racketeering, bribery, wire fraud, money laundering, obstruction of justice and unlawful procurement of naturalization. Authorities arrested a number of the indicted FIFA officials in Zurich as they gathered days before the scheduled re-election of the organization’s longtime president, Sepp Blatter. The arrests resulted from a lengthy investigation by U.S. authorities which revealed that since the 1990s, FIFA officials had allegedly received bribes totaling approximately $150 million in exchange for votes regarding which companies would be allowed to televise games, where the games would be held, and who would run the organization. Some of the underlying conduct, such as the origination of wire transfers, purportedly occurred in the United States, thereby providing U.S. authorities with the alleged “jurisdictional hook” needed to bring charges. Following the arrests, several other countries, including Australia, Colombia, Costa Rica and Switzerland publicly announced their own investigations into FIFA-related corruption.
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