When you start to play football (or soccer, or whatever it’s called in your country) at a competitive level with real goalposts, referees and crowd trouble, one of the first things you learn is what to do when you commit a foul that elsewhere would get you arrested for causing grievous bodily harm (or aggravated assault, or whatever it’s called in your country). Don’t mutter “Sorry, old chap” and head shamefaced for an early bath. No, clamp your elbows to your sides, turn the palms of your hands upwards, hunch your shoulders, and stare incredulously at the approaching red card with a look of outraged innocence. That’s what was going on behind those bed sheets as FIFA’s finest were being led to their new team bus by the Swiss police.
The officials are charged with pocketing over 100 million euros thanks to illegal deals for various bits of footballing business. What may be surprising to people who aren’t interested in money football is that what surprises fans is the fact that the FIFA bosses were arrested, not that they may be corrupt. Even here at the OECD where a search on our website for “sports” brings up a discussion of the Australian Trade Practices Act or restrictions on franchise relocation in the US, questionable practices concerning the rights to broadcast football (one of the deals in question) appear regularly in country submissions regarding competition policy, such as this one in 2013 from Poland to the Global Forum on Competition.
Sepp Blatter, FIFA president, says he’s glad his friends got caught: “we welcome the actions and the investigations by the US and Swiss authorities”. And at tomorrow’s meeting of the Association, there will no doubt be calls to strengthen the fight against corruption. It’s a problem any authority handling large sums of money has to deal with. An OECD Policy Brief on fighting bribery cites World Bank estimates that more than $1 trillion dollars are squandered every year on bribes paid to public officials in exchange for advantages in international business.
When Sepp won his first presidential election in 1998, you could actually deduct bribes from your taxes as a legitimate business expense in some OECD countries. All that changed in 1999 when the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions came into force. FIFA itself is a private business of course, but it deals closely with governments when awarding the right to stage its major tournaments, especially the World Cup. One if its conditions is the right to BEPS – it doesn’t have to pay tax on its earnings in the host nation.
Even so, countries, cities or regions hope to benefit from the World Cup, Olympics and other big shows to promote economic growth by focusing efforts to provide and improve infrastructure, make the locality known to potential investors, and so on – “legacy” as they call it.
But as another OECD report on the benefits of staging global events warns, “Too many events have left places worse off, with expensive facilities that have no use, and a big bill to pay into the future”. That seems to be the case in Cuiaba, Brazil that has so far spent a billion reais ($350 million) of public money on a light rail system for last year’s World Cup that so far only has one station and will take at least another $100 million to finish. According to BloombergBusiness “Cuiaba’s rail system is the most visible failure of projects linked to the 2014 World Cup. The city has failed to complete 22 other promised legacy works including a hospital and several transport infrastructure programs.”
Oxford University’s Said Business School isn’t a fan of the 2010 World Cup’s legacy in South Africa either: “Instead of the economic growth the stadiums were intended to stimulate, six newly built stadiums all have annual maintenance costs which exceed their revenue, and five out of six require ongoing taxpayer support. […] the legacy of these stadiums is having an undeniably negative effect on South Africa.” But it would be unfair to single out the World Cup when there are claims that the billions Greece spent on the Athens Olympics in 2004 is partly to blame for the current crisis.
In any case, we now have the answer to the question we asked last year when launching the Portuguese version of our Better Life Index in Brazil: Is there more to life than football? The answer is “Yes, prison”.
More bad news for FIFA: “Today the BWI (Building and Wood Workers’ International) filed a complaint against FIFA under the OECD Guidelines for Multinational Enterprises for failing to engage in due diligence concerning human rights for migrant construction workers in Qatar. The submission asks the Swiss National Contact Point to use its good offices with FIFA to facilitate change and to facilitate productive discussions between FIFA and BWI.“ BWINT web site
The next Global Forum on Responsible Business Conduct (18-19 June here at the OECD) has a highly topical session on “Responsibility in International Sporting Events”. Here’s the programme note:
International sporting events involve an intensely competitive bidding process for the host country and large corporate sponsorship amounts. In light of the upcoming Brazil (2016), PyeongChang (2018), Tokyo (2020) Olympics and FIFA World Cups in Russia (2018) and Qatar (2022), this session will be an opportunity to reflect on the role and responsibilities of governments, international bodies and enterprises (such as IOC, FIFA and Formula One) in ensuring that RBC standards are observed throughout the organisation of such events.