In the wake of the FIFA corruption scandal, the Confederation of North, Central America and Caribbean Association Football (CONCACAF) recently approved an expansive new reform framework that seeks to substantially strengthen the Confederation’s governance, management, and operations.
CONCACAF’s executive committee unanimously approved the reform framework during an in-person meeting in Vancouver, Canada on July 4, just two days after the U.S. government submitted a formal request to Switzerland’s Federal Office of Justice (FOJ) to extradite seven FIFA officials arrested May 27 in Zurich. The formal request, issued July 1, is based on arrest warrants issued May 20 by the U.S. Attorney’s Office for the Eastern District of New York, which is investigating the high-ranking FIFA officers on suspicion of taking bribes worth over $100 million.
“In return, those suspected of paying the bribes—representatives of sports media and sports promotion firms—are believed to have received media, marketing, and sponsorship rights for soccer tournaments in the United States and in Latin America,” the FOJ stated. Payments allegedly were routed through U.S. banks.
The reform framework, developed at the request of the Confederation’s executive committee, is “an additional step toward ushering in systemic organizational change to further enhance CONCACAF’s business operations through improved governance, increased public disclosure, and enhanced anti-corruption controls,” said CONCACAF, noting that implementation will begin immediately.
Proposals contained in the reform framework fall into three categories: Corporate governance; fraud prevention and compliance; and transparency. Those categories are discussed in further detail below.
Require a minimum number of members of the executive committee to be independent (i.e., not affiliated with any football-related activities of any member association);
Impose term limits on all members of the executive committee, including the president;
Approval by Congress of executive committee member compensation on an annual basis;
Review and recommend changes to executive committee composition, nomination and election procedures to ensure greater representation and prevent entrenchment.
Fraud Prevention and Compliance
Establish the position of chief compliance officer with responsibility for overseeing the compliance program and with direct reporting lines to general secretary and independent members of audit committee.
Implement a “pre-approved” vendor system for all contracts with CONCACAF, including credit and background checks for all vendors.
Retain outside consultant(s) to improve bid process, audit counterparties for bribery and fraud, and review internal controls, including expense and reimbursement controls.
Review and adopt stronger related party transaction policies (i.e., all employees and executive Committee members must certify on an annual basis compliance as to policies, including restrictions on transactions with immediate family members, and formal processes for disclosure and recusals for executive committee members for conflicts of interest.)
Implement a whistleblower hotline to be administered by CONCACAF’s audit committee.
Make available publicly annual financial statements and budget of CONCACAF on website; and
All officer and executive committee member compensation reported under IRS Form 990 to be publicly available on CONCACAF website.
“This reform framework reflects CONCACAF’s commitment to strengthening our governance, management, and operations,” CONCACAF said in a statement. “These reforms are intended to apply best practices for sound corporate governance to CONCACAF’s business operations.”
The executive committee has authorized the special committee, with the assistance of law firm Sidley Austin and global professional services firm Alvarez & Marsal, to move forward to undertake these reforms as well as recommend changes to CONCACAF’s statutes to be submitted to the Congress for approval to the extent necessary to implement the reform framework fully.
To develop the reform framework, the Confederation convened a three-member special committee made up of the following members: Justino Compean of the Mexican Football Federation; Sunil Gulati of the United States Soccer Federation; and Victor Montagliani of the Canada Soccer Association.
This special committee was charged, at the request of the Confederation’s executive committee, with overseeing the day-to-day operations of the Confederation in the wake of the U.S. indictments of certain CONCACAF officials, including recommending reforms to its operations and governance.
CONCACAF said it will continue to issue updates on the progress of its reform framework.