corporate social responsibility and ethics

FIFA Case Study for 6BU004 In this case study you are required to apply ethics and csr theory to the football organisation, FIFA. You will lose marks if you refer often to the difficulties involved in the management of large international organisations. REMEMBER this module is about ethics and corporate social responsibility, so use the WOLF material thoroughly as well as applying other academic sources. There are compulsory questions at the end of the case. IMPORTANT note from William Scarff, module leader. Due to the evolving nature of the crises at FIFA, I shall place extra information in the section Supplementary information at the end of the case study, before the compulsory questions. This information will be made available by about 4th March. No developments after that date will be included. In the early hours of 27th May 2015, Swiss police raided the luxury Baur au Lac Hotel in Zurich. Their targets were senior figures in one of the largest, most powerful, and allegedly corrupt organisations in the world. But this was not a criminal gang, nor was it the Italian mafia: it was the Fédération Internationale de Football Association, known globally as FIFA. The following case study covers four key ethical themes in relation to what has become known as the FIFA scandal, namely leadership ethics, corporate governance, stakeholder perspectives, and organisational context. FIFA was founded in 1904 and currently comprises 209 national football associations from within six regional confederations: Africa, Asia, Europe, North & Central America and the Caribbean, Oceania and South America. It is a registered charity, established under Swiss law, with headquarters in Zurich. It generates income from sponsorship. In 2013 it had revenues of more than $1.3 billion, resulting in a net profit of $72 million, and retained cash reserves in excess of $1.4 billion. The association is led by an Executive Committee composed of 24 individuals: the President, 8 vice-presidents and 15 members; and daily administration is undertaken by the General Secretariat, with a staff of around 280, under the leadership of the President and General Secretary. Remuneration for the presidency in 2011 was approximately 2 million Swiss francs, (about $ 2million) with 1.2 million Swiss francs /dollars in salary plus bonuses. The supreme body is the FIFA Congress, an assembly of national representatives, within which each member has one vote, regardless of their countrys population or team ranking. Congress meets in ordinary session once a year and has held additional extraordinary sessions each year since 1998, to make decisions in relation to FIFAs governing statutes, approval of annual reports, acceptance of new members, and Congress holds elections for Executive Committee roles, including the President. The international structure of the organisation includes operational committees, under Executive authority or created as standing committees by Congress, with responsibility for key issues such as finance, discipline and refereeing. Results are published under the International Financial Reporting Standards (IFRS). The remit, the task of FIFA, is to organise and promote international tournaments such as the World Cup including making decisions as to where they are held. FIFA also organises the Confederations Cup, and football within the Olympics. It takes an active role in the running and development of football globally, and has the power to suspend members, for example when they are not functioning properly or when national governments are deemed to be interfering, but the rules of the game are controlled externally by the International Football Association Board. IFAB includes four FIFA members and four representatives from the England, Scotland, Wales and Northern Ireland football associations respectively. With little or even no public warning, the US Department of Justice accused FIFA of corruption on a large scale. Revelations and arrests came in May 2015. A Swiss police raid on FIFAs headquarters quickly followed. Little of all this is new: such raids have not been the first in FIFAs recent history. Indeed in the 17 year leadership of current President and Swiss national Joseph Sepp Blatter, the organisation has been dogged by accusations, from mismanagement to criminal activity. In 2006, journalist Andrew Jennings published a book detailing an alleged cash-for-contracts scandal following the collapse of FIFAs marketing partner ISL and vote-rigging in presidential elections. ( Andrew Jennings The Dirty Game and in 2015 he published The secret world of FIFA) A subsequent Panorama documentary revealed that Sepp Blatter was being investigated by the Swiss police over a secret deal to repay more than £1m of bribes pocketed by football officials. Lord Triesman, former chairman of the English FA, described FIFA as an organisation that “behaves like a mafia family”, highlighting “decades-long traditions of bribes, bungs and corruption”. Four years later, Panorama alleged that three senior officials had been paid huge bribes by ISL between 1989 and 1999, and another had been repeatedly involved in reselling World Cup tickets to touts, which FIFA failed to investigate because it had not been told about it by official channels€. The latter exposé also criticised the organisation for requiring nations bidding to be tournament hosts to implement special laws which gave blanket tax exemptions to FIFA and its sponsors. The confidentiality of the bidding process should have included this clause, but the Dutch government refused to agree to the laws and revealed them, thus adversely affecting its bid. Andrew Jennings was banned from all FIFA press conferences following the 2006 programme. In 2011, the International Olympic Committee started proceedings against honorary FIFA president João Havelange for bribery, specifically that he accepted a $1m bung from ISL in 1997. Later that year, an independent governance committee convened by FIFA, and chaired by Professor Mark Pieth, claimed progress had been made on key areas of reform but called for further progress on the introduction of term limits, integrity checks for Executive Committee members and more transparency on salaries. He predominantly blamed UEFA for the lack of progress on these salaries and praised Blatter in interviews to support publication of the final report, saying the prospects for reform are probably at their greatest if Blatter wins more time.€ Head of the Swiss branch of anti-corruption NGO Transparency International, Eric Martin said he has had 17 years€. Throughout his tenure Sepp Blatter has remained a controversial figure, with an obvious passion for football, FIFA and his role, but he has often been outspoken and has been criticised for the inappropriateness of comments. These include the suggestion that female footballers should play in tighter shorts to increase the popularity of the womens game; he could understand if match-fixing happened in Africa but not Italy; England captain John Terry would have been applauded in some countries for having an extra-marital affair; on the field racism should be settled with a handshake; and gay fans should refrain from having sex in Qatar. His tenacity was highlighted when he likened himself to a mountain goat, saying I cannot be stopped, I just keep going€ but was challenged when he stated he would not forget€ UEFAs threat to boycott the World Cup if he did not step down in the face of the recent scandal. The most recent allegations, however, relate to two separate but interlinked scandals, the first a wide-reaching, three-year FBI investigation which led the US Department of Justice to issue a 47-count indictment for fourteen individuals, relating primarily to bribes for commercial deals relating to US and Latin American tournaments from the 1990s to the present day. Nine current and former FIFA officials were named, included vice-president and president of CONCACAF Jeffrey Webb, and his predecessor Jack Warner, who were charged with corruption. Their General Secretary, Charles Chuck Blazer had already pleaded guilty, as had his two sons. Sepp Blatter was not arrested or indicted, but the Swiss attorney-general said he could not rule out later interviews. Through participation in the alleged 24-year scheme, the perpetrators were described as enriching themselves through the corruption of international soccer€, whilst it was defined within documents as fostering a culture of corruption and greed€ and it was suggested that undisclosed and illegal payments, kickbacks and bribes became a way of doing business at FIFA€. Specific details included payments of well over $150m€ in bribes from US/South American marketing executives to secure lucrative marketing and media rights to international matches and tournaments in the region, but also alleged further possible corruption around the world. The core pivotal issues have been the charges that there was a $10m deal which prosecutors alleged was a bribe to secure the 2010 World Cup in South Africa, with newspaper reports of an email outlining a deal between Blatter and then South African president Thabo Mbeki. The message sent from FIFA general secretary Jerome Valke to a government minister, queried the date of payment and referred to Blatter-Mbeki discussions. In response the South African government said it was a legitimate payment to promote Caribbean football, but documents seen by the BBC suggested that Jack Warner used it for cash withdrawals, personal loans and to launder money. Chuck Blazer was also charged, along with others on the Executive Committee, for accepting bribes to ensure the selection of the country as host. Although ground operations were executed within Switzerland, the action was very much led by the Americans, on the Department of Justice premise that although the crimes were of a global nature, the planning process was carried out in the US, with the use of US banks to transfer money key to the investigation. Whilst media coverage in the EU remained intense, there was little discussion elsewhere, with a feeling that the lack of political links between those arrested both facilitated the prosecution process and accounted for a lack of public interest. One criticism was of the scope of US leadership in the matter via extraterritorial jurisdiction, the legal ability of a government to exercise authority beyond its normal boundaries, with Russian president Vladimir Putin asking what business is this of America€. In terms of the second scandal to rock the organisation, within hours of the first police raid Swiss authorities also announced that were opening criminal proceedings to consider the awarding of hosting rights to Russia and Qatar, for the World Cup 2018 and 2022 respectively. As part of an investigation into criminal mismanagement€ and money laundering€, based on electronic data seized from FIFA headquarters later the same day, they expressed their intent to question ten Executive Committee members who took part in the voting process in December 2010. Doubts had already been raised about the legitimacy of the 2010 vote and so in 2012, in an attempt to address accusations, FIFA hired former US prosecutor Michael Garcia to investigate allegations of bribery. But following a two-year enquiry, the decision was made in December 2014 not to release the full report, but instead to publish an executive summary compiled by chairman of the FIFA ethics committee Hans-Joachim Eckert which cleared the hosts of wrongdoing, exonerated the bidding process and reported no major irregularities€. In response Michael Garcia resigned, and released his own statement saying the summary contained numerous materially incomplete and erroneous representations€. Six months earlier, the Sunday Times had also alleged that former FIFA vice-president Mohamed bin Hamman had paid £3 million to football officials to gain support for the Qatari bid, and used contacts within the Qatar royal family and government to broker commercial deals with representatives from Thailand and Germany. He had also arranged meetings between Sepp Blatter and the royal family, and the Qatari bid team and president of the UEFA Michel Platini, and discussed bilateral relations€ between Russia and Qatar with Vladimir Putin just prior to the vote in 2010. Mohamed Bin Hamman was subsequently banned from football for life in 2012 for his part in another corruption scandal. Concerns had also been raised in respect of the countries who bid successfully, to be able to host the forthcoming tournaments. Russia already had a problem with significant racism in domestic football and discrimination against LGBT people in society generally, but more recently, it faced condemnation from around the globe for its military action in Ukraine, and its alleged involvement in the shooting down of a Malaysian passenger plane. Climate was an initial worry with regard to Qatar, with clubs then objecting to a move to a winter tournament to address this, but further outcry related to the treatment of workers on World Cup facilities, and general apprehension over cultural differences such as the banning of alcohol and prohibition of homosexuality that would affect visiting fans. Unsurprisingly, there was widespread response to the combined scandals, initially from Walter De Gregorio, FIFAs communications director who suggested that this is good for FIFA€¦ it hurts, it is not easy, but it confirms we are on the right track€. He said Blatter was at the time very calm€ and is fully co-operating€ but not dancing in his office€, and insisted the organisation was committed to reform. A further written FIFA statement welcomed actions that can help contribute to rooting out any wrongdoing in football€. UEFA said it was astonished and saddened by the events€, whilst here in the UK, the FA said that events were very serious for FIFA and its current leadership€. Corporate sponsors also expressed their views with Adidas stating that the negative tenor of the public debate around FIFA at the moment is neither good for football nor for FIFA and its partners”; Coca-Cola noting “anything that detracts from the mission and ideals of the FIFA World Cup is a concern to us”; and Hyundai/Kia declaring “we are confident that FIFA is taking these allegations seriously and that the investigatory chamber of the FIFA ethics committee will conduct a thorough investigation”. Sony and Visa also issued statements, but Emirates declined to comment. Former England captain Gary Lineker tweeted “There can’t be a more corrupt, deplorable organisation on earth than FIFA. The house of cards is falling. Time for change!”€¦ “This is extraordinary! FIFA is imploding. The best thing that could possibly happen to the beautiful game.” Three days after the raids, and despite numerous calls to postpone the presidential elections, Sepp Blatter was voted back into post for a fifth term, declaring I am the president now, the president of everybody€. Tom Fordyce Chief Sports Writer BBC Sport 2nd June 2015. But as pressure increased and confirmation that the FBI was widening its investigation, he made an announcement four days later on 2nd June that he would be stepping down when a successor is chosen€. He stated that he would remain in post until the election, the date for which was later set for 26th February 2016, and until then would be working on reforms€ at FIFA. But on 25th September, only three months later, the BBC reported in its 10 pm news bulletin that Swiss authorities had arrested and then released Sepp Blatter on bail for criminal mismanagement and misappropriation of FIFA funds. His successor Michel Platini has also been implicated in corruption. Clearly this story has a long way to run yet€¦€¦ Supplementary Information to be added by 4th March. You may use this information with the case study above. Questions: If you do need help and guidance please do so at an agreed scheduled session during the module. Your lecturer will not mark emailed draft assignments. When you have fully understood the case, write an essay for each question below. Word length. The guidance is 1000 words per question but a total of 3000 words will be acceptable. The word length should not exceed 5000 words. To achieve a grade of 60% or above you must include at least 2 academic journal articles in the total assignment, but not for each question. Do not include general unreferenced sources from Wikipedia or other sources without peer academic review. In your answers restrict yourself to the information from the case study. You will NOT gain extra marks from adding later information about the development of the case unless you can show that the extra information does raise new moral /csr, not managerial, issues. 1 Using two ethical contrasting ethical theories/perspective studied on the module, discuss the actions of the FIFA Executive Committee, and particularly those of the President, Sepp Blatter. 2 With regard to both its hierarchical structure and global charity status, use CSR/ethical theory to discuss the governance of FIFA, with particular regard to transparency and accountability. 3 Consider the impact of the FIFA scandals on the reputation of FIFA, on football and on sport. How might the scandals affect / may affect the actions of stakeholders? Discuss in the context of module theory. 4 In the context of the future of CSR and ethics, consider the advantages and disadvantages of the role that diverse national cultures, including morals, play in multinational organisations such as FIFA. CAN YOU USE THE FOLLOWING Theory from Buchholtz and Carroll MILTON FREIDMAN ETC

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