June 01, 2015

Soccer’s FIFA Is Morally Bankrupt � Corporations Should Suspend Sponsorships Until Blatter Resigns

The fish rots from the head, and this is undoubtedly the case with FIFA and its leader, Sepp Blatter.

U.S. Attorney General Loretta Lynch’s indictment of 14 senior FIFA officials confirms what we all knew. FIFA is a deeply corrupt organization. Lynch, who collaborated with the police in Switzerland to arrest seven FIFA officials, detailed at least $150 million in corrupt payments over 24 years. At week’s end, Justice Department officials said they were preparing additional indictments.

The only objections came from Russian President Vladimir Putin, whose compatriots worked with representatives of Qatar to lock in the 2018 and 2022 World Cups for their respective countries. Putin seemed genuinely concerned that revealing the corruption that led to this surprise dual selection could jeopardize Russia’s chances for 2018.

That led UK Prime Minister David Cameron to speak out. Having lost the 2018 bid to Russia, Cameron bluntly called for Blatter’s resignation. “We cannot have accusations of corruption at this level and on this scale in this organisation, and pretend that the person currently leading it is the right person to take it forward. Frankly, what we’ve seen is the ugly side of the beautiful game and he should go, and the sooner that happens the better.”

Meanwhile, soccer leaders prepared to re-elect Blatter last week. The FIFA delegates meeting in Switzerland last Friday overrode the objections of the European nations and the United States, and voted overwhelmingly to re-elect the 79-year-old Blatter for a fifth term.

In defending himself, Blatter made the absurd claim that “I cannot monitor everyone all the time.” Really? Some 14 of Blatter’s closest subordinates have been criminally indicted, and he has no responsibility?

No self-respecting public company board would accept this response from its leader. Global CEOs are charged with monitoring the behavior of their subordinates. A key part of the job is to ask probing questions, build awareness of potential reputational risks, and identify issues like this. It’s governance malpractice for a governing board to not immediately relieve the chief exective of his duties in a circumstance such as this – particularly in light of Blatter’s very public and blatant statement abdicating responsibility for the situation. If he’s not responsible, who is?

The FIFA situation raises a difficult issue: How can corrupt global organizations be transformed when those governing them re-elect themselves? In this situation, they also have too much money and limited financial controls.

This week’s events demonstrate that national law enforcement is one avenue for justice. The other way, which would have swifter impact, is for FIFA’s commercial and media sponsors to withdraw their funding. Thus far, several major sponsors, including Coca-Cola, Visa, McDonald’s, Adidas, Budweiser, and Hyundai, have said they are “reviewing the situation.” These high integrity global organizations should immediately suspend their sponsorships until FIFA has new leadership. The same goes for the television sponsors, Fox Sports and Telemundo. Blatter won’t survive for long if they cut off his cash flow.

Is your organization showing signs of moral decay? Do your leaders take responsibility for the integrity of the entire organization?

Leaders are responsible for creating a moral climate in their organizations, and ensuring that its business affairs are carried out with integrity. Of course, there will always be individuals who deviate from company policy, in which case high integrity leaders move swiftly to terminate them and take appropriate follow-up action to prevent repeat incidents.

The vast majority of today’s business leaders do precisely that. The exceptions, such as Blatter, give a poor name to all who view leadership as a higher calling. High integrity leaders must support firm action against those who destroy important enterprises like world soccer.

The sponsors whose funds are being used by corrupt leaders like Blatter and his compatriots should take definitive action now. Instead of “reviewing the situation,” they should collectively suspend their corporate relationships with FIFA. This definitive statement can reshape soccer and restore integrity.