In a move reminiscent of FIFA arrests in 2015, the Department of Justice recently announced a series of arrests from an undercover operation exposing one of the sordid underbellies of college sports: the myth of amateurism at the highest level of collegiate sports.
Justice Department representatives said the arrests were the result of a long-standing undercover operation, in which a cooperating witness wore a wire to catch multiple Division I basketball coaches, financial advisors, and one vice president from sports apparel company Adidas engaging in bribery and corruption.
As Compliance Week reported, the illegal schemes occurred in two ways. The first was paying high-school athletes to attend universities and colleges that had contracts with Adidas with the hope they might sign with Adidas if they made it to the NBA. Such a scheme also ensnared the coaches leading to their arrests.
The second scheme involved steering these young athletes to corrupt financial advisors who would manage their money after they turned pro. This prong of the scheme ensnared the financial advisors.
Adidas provided money for both types of fraud, and this was the allegation posed against the arrested Adidas vice president. At least one major university is caught up in the scandal, Louisville, whose head coach and athletic director have already lost their jobs over the scandal.
The Man From FCPA thought about the implications under the FCPA. Recall that the FCPA accounting provisions do not require that a bribe be paid to a foreign official to be violated. Adidas is alleged to have funded payments of up to $100,000.
The immediate question is how Adidas internally recorded these payments and what types of internal controls failures, over-rides, or even lack of internal controls allowed such payments to be made. Many colleges and universities already caught in the scandal are public institutions, which means all people—from the head coach on down—are government employees.
Will the FCPA become a part of this huge sports imbroglio? About the best advice The Man From FCPA can provide at this point is to watch this space.