Saturday, May 26, 2012

FIFA Governance Reform Report Card

Now that the FIFA Congress is over, we are in a position to evaluate FIFA's efforts at reforming its governance.  Mark Pieth, the head of the FIFA Independent Governance Committee, spoke to the Congress and urged FIFA not to "cherry pick" reforms.  Sepp Blatter responded as follows, according to Bloomberg:
“We cannot take all the package now: this is impossible,” Blatter said meeting, adding members would need to discuss changes first. “Even if Professor Pieth says we shall cherry pick, we cannot take the whole tree. It’s impossible to take the tree and have all the cherries down.”
With that expectation setting, below I take a look at the recommendations offered by Pieth in the scoping paper that he prepared in September last year, before being installed at the IGC chair (here in PDF).  The call-out boxes have the text of Pieth's recommendations, which is then followed by my assignment of a grade and explanation.
1. Recommendations in Analogy to the Corporate World

1.1 FIFA could further upgrade its existing financial governance, in particular by: a) developing a catalogue of potentially critical payments, and by deciding whether direct controls are warranted or whether indirect controls could be sufficient; b) intensifying its specific anti-corruption controls within existing COSO.
GRADE: Incomplete -- FIFA has apparently taken none of these steps.
1.2. FIFA should upgrade its compliance system to meet the requirements of a state of the art corporate anti-corruption compliance programme (including a review of the Code of Ethics, the risk analysis, the detailed rules on contributions etc. and the hiring of third parties, education and training as well as notification channels). Particular emphasis needs to be placed on the credible implementation of the programme. Member Associations and Confederations should be encouraged to adopt comparable standards.
GRADE: F --  FIFA is far from a "state of the art corporate anti-corruption compliance programme."  This is an F not an Incomplete because FIFA has recognized the need for such steps. The revelations this past week from CONCACAF underscore this need.
1.3. On an organisational level, a) FIFA should consider electing independent members into the ExCo.
GRADE: F -- this recommendation is posed as "should consider" which is rather weak. Nontheless, there is little evidence for such consideration.
b) The competences of the Financial Committee and the Audit Committee should be clearly distinguished. The Audit Committee, in order to act as a genuine internal control body, needs to be sufficiently independent from the administration (the agenda should be set by the Chair, the Committee should have access to external resources under its own authority, if need be).
GRADE: F -- There is no evidence that the FIFA Audit Committee has the capability to act as a "genuine internal control committee" and there is not independence.
c) Likewise, the Ethics Committee and the Disciplinary Committee should obtain clearly distinct tasks. This will require a reform of the underlying Codes (Ethics Code and Disciplinary Code). The Ethics Committee needs to be transformed into an independent body with a mix of external and internal members and the power to initiate investigations based on its own assessment.
GRADE: D -- This is the recommendation that FIFA has focused on throughout.  I suppose this is the cherry that Blatter picked. The functions have been split, however the degree of independence is minimal, which severely undercuts the proposed reform.
d) A Compensation and Benefits Committee should decide over benefits of officials of FIFA bodies and senior staff.
GRADE: F-- This also appears to have been rejected outright by FIFA.
2. Recommendations Derived from FIFA’s Public Role 2.1. Elections into FIFA’s Bodies a) Presidential Election< Candidates should announce their wish to stand sufficiently ahead of the election.
GRADE: Incomplete -- It is not clear if FIFA has considered this recommendation.
FIFA should examine a system of campaign financing which provides officially announced candidates with sufficient backing (a certain number of Member Associations) with FIFA funding, ruling out further private campaign contributions.
GRADE: Incomplete -- it is not clear if FIFA has considered this recommendation.
b) Term of Office FIFA should consider limiting terms of office of its officials.
GRADE: F -- It appears that FIFA has considered and rejected this recommendation.
c) Due Diligence on Members of FIFA Bodies< FIFA should consider introducing regular due diligence checks by the Ethics Committee on elected Members of its bodies. A regulation should specify cases of incompatibility with the FIFA function. The regulation should also define the procedure, and clarify under which circumstances an official would be temporarily suspended from his function.
GRADE: Incomplete -- this does not appear to have been considered by FIFA, and seems implausible that it would be implemented in any manner under current circumstances.
2.2. Decisions Decisions on hosting and on commercialising would greatly benefit, beyond a review of the actual procedures, of an overall abstract strategy, defined by relevant Committees and ratified by Congress.
GRADE: Incomplete -- This too does not appear to have been considered by FIFA.
3. Recommendations Reflecting FIFA’s Relations to its Members 3.1. Conflict of Interest Regulation An institution of the size and significance of FIFA needs a state of the art conflict of interest regulation, indicating cases of conflict and specifying the procedures (up to a possible recusal). While a conflict of interest regulation is a general requirement, it will be particularly useful to prevent abuses and adverse publicity in FIFA’s relations to Members.
GRADE: F -- This has been oft-commented upon here (such as) and even the IGC fell well short of the standards set by Pieth.
3.2. Development Funding Additional preventive measures ensuring transparency and accountability in its relations with Members should be taken in the area of financial contributions for the development of football in countries and regions. An overall strategy should be adopted for the multitude of historically grown funds. They should be governed in a comparable manner, and expenditure as well as uses audited on the standard of the Goal Programme and FAP.
GRADE: F -- As learned this past week, FIFA has a long way to go.

Overall -- The cherry picked by FIFA does not make a very satisfying meal.


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