Sunday, October 23, 2011

FIFA's Good Governance Committee and Conflicts of Interest

Last Friday, FIFA announced that it was going to establish an "independent" and "transparent" advisory committee to guide its reform process -- the Good Governance Committee. Lucky for me and for FIFA, I happen to have some expertise in the empanelment of expert advisory committees.

A first thing to look for as FIFA establishes the committee will be to see if it enforces a conflict of interest policy for the panel. It would seem obvious that including individuals on the committee who have an employment, business or other formal relationship with FIFA or its member confederations would diminish the independence (perceived or actual) of the committee. Good governance procedures should start with the creation of the Good Governance Committee.

What is a conflict of interest?

The US National Academy of Sciences, which routinely empanels advisory committees, provides a useful definition (here in PDF):
It is essential that the work of committees of the institution used in the development of reports not be compromised by any significant conflict of interest. For this purpose, the term "conflict of interest" means any financial or other interest which conflicts with the service of the individual because it (1) could significantly impair the individual's objectivity or (2) could create an unfair competitive advantage for any person or organization. Except for those situations in which the institution determines that a conflict of interest is unavoidable and promptly and publicly discloses the conflict of interest, no individual can be appointed to serve (or continue to serve) on a committee of the institution used in the development of reports if the individual has a conflict of interest that is relevant to the functions to be performed.
I would not be surprised if FIFA has little awareness of issues of conflict of interest, as it has rarely if ever sought to formally solicit independent advice. However, since FIFA is being advised by Transparency International, there is a good chance that such issues will be brought to their attention. As well, the media who cover FIFA might also press the organization on how it plans to ensure the independence of its Good Governance Committee, including its management of issues of conflict of interest.

A committee that I served on of the Bipartisan Policy Center a few years ago wrote a report on expert advisory committees and emphasized the importance of transparency in disclosure of actual or potential financial conflicts of interest (here in PDF).

An early indication of the seriousness with which FIFA is taking its Good Governance Committee will be whether it clearly delineates and applies a conflict of interest policy, including full disclosure of potential conflicts. Such a move will enhance the credibility of FIFA's steps towards reform by providing a public assurance in the actual independence of the advisory body. Should FIFA not take such steps its efforts at reform will be rightly questioned from the outset.

Here are a few more details from the US NAS on conflicts of interest as related to advisory committees:
General Principles

The term "conflict of interest" means something more than individual bias. There must be an interest, ordinarily financial, that could be directly affected by the work of the committee. Conflict of interest requirements are objective and prophylactic. They are not an assessment of one's actual behavior or character, one's ability to act objectively despite the conflicting interest, or one's relative insensitivity to particular dollar amounts of specific assets because of one's personal wealth. Conflict of interest requirements are objective standards designed to eliminate certain specific, potentially compromising situations from arising, and thereby to protect the individual, the other members of the committee, the institution, and the public interest. The individual, the committee, and the institution should not be placed in a situation where others could reasonably question, and perhaps discount or dismiss, the work of the committee simply because of the existence of such conflicting interests.

The term "conflict of interest" applies only to current interests. It does not apply to past interests that have expired, no longer exist, and cannot reasonably affect current behavior. Nor does it apply to possible interests that may arise in the future but do not currently exist, because such future interests are inherently speculative and uncertain. For example, a pending formal or informal application for a particular job is a current interest, but the mere possibility that one might apply for such a job in the future is not a current interest.

The term "conflict of interest" applies not only to the personal financial interests of the individual but also to the interests of others with whom the individual has substantial common financial interests if these interests are relevant to the functions to be performed. Thus, in assessing an individual's potential conflicts of interest, consideration must be given not only to the interests of the individual but also to the interests of the individual's spouse and minor children, the individual's employer, the individual's business partners, and others with whom the individual has substantial common financial interests. Consideration must also be given to the interests of those for whom one is acting in a fiduciary or similar capacity (e.g., being an officer or director of a corporation, whether profit or nonprofit, or serving as a trustee).

Financial Interests

The term "conflict of interest" as used herein ordinarily refers to financial conflicts of interest. In assessing potential conflicts of interest in connection with an individual's service on a committee of the institution used in the development of reports for sponsors, particular attention will be given to the following kinds of financial interests if they are relevant to the functions to be performed: employment relationships (including private and public sector employment and self-employment); consulting relationships (including commercial and professional consulting and service arrangements, scientific and technical advisory board memberships, and serving as an expert witness in litigation); stocks, bonds, and other financial instruments and investments including partnerships; real estate investments; patents, copyrights, and other intellectual property interests; commercial business ownership and investment interests; services provided in exchange for honorariums and travel expense reimbursements; research funding and other forms of research support.


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