The FIFA scandal continues to roll down the road. The organization just cannot seem to move past the endemic corruption baked into its system. The most recent casualty was David Chung, who resigned as the president of the Oceania Football Confederation. This time, the allegations were not that he had sold his vote for the location of a past or upcoming World Cup, but that he had profited from monies sent by FIFA to the regional soccer federations.
In the case of the Oceania Football Confederation (the smallest of FIFA’s six continental confederations), it was sent $10 million to construct stadiums and training facilities in its member nations. Allegations were raised in an audit that Chung and a colleague gave no-bid contracts to construct facilities in New Zealand. The entities awarded the project were allegedly either related to or controlled by Chung and associations. Moreover (and perhaps most damning red flag from a corruption perspective), these entities had no business experience in the design or construction of either physical facilities or soccer fields.
The red flags raised in these allegations should serve as a lesson to every compliance practitioner. First and foremost, anytime a no-bid contract is awarded without sufficient review for sole source expertise, it is a clear signal that additional questions need to be asked, answered and then reviewed. Next is the expertise of the counter-party. If you are contracting with an entity to build a facility and that entity has never engaged in that business, additional investigation is warranted. If it turns out the company is a new business but consists of construction engineers starting out a new venture, that perhaps is acceptable. But the key is that when a red flag is raised, it is investigated and cleared.
Finally, and always problematically, is the opaque ownership structure of a hidden beneficial owner. In the case of the former FIFA official, there were a series of shell companies allegedly designed to hide the ultimate beneficial owner. All of these companies were set up immediately before the contract was awarded, once again on a no-bid basis.
This most recent FIFA corruption imbroglio points up again the need for robust anti-corruption policies, procedures, and oversight, but also provides some excellent lessons to review for red flags, their investigation and clearance.