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For the Love of the Game: Corruption & Sports NGOs

tennis-player-1246768_1280This article, written by GRC Solutions Expertise Panel member Jeremy Sandbrook and co-authored with Liz Burton,  examines some of the types of corruption that has taken place within sports NGOs, why they are so susceptible to it, and what some of the potential solutions are to solving the problem.

While sport is now the dominating source of entertainment worldwide, it has a darker, shadier under-belly it just can’t seem to shake-off – Corruption.  Sports NGOs are particularly vulnerable with bribery, match-fixing, extortion, doping and money laundering now common place.

 

Sports NGOs and ‘Corruption as usual’

It seems that barely a month passes without yet another report of corruption in sports being splashed across newspaper headlines.  These include members of FIFA’s executive committee accepting bribes, a former president of CONCACAF charged with fraud and money laundering, hosting nations paying bribes to win Olympic hosting rights, match-fixing, and the IAAF’s involvement in corruption and cover ups.

This phenomenon isn’t just limited to football and athletics however, with the following examples showing just how wide spread the issue is:

  • Cricket has witnessed allegations of both spot-fixing and match-fixing involving players from Pakistan, England, New Zealand, India, South Africa, Sir Lanka and Kenya.  There have also been on-going match-fixing allegations made in relation to the Indian Premier League (the most lucrative cricket event in the world), with two of the league’s eight teams recently suspended for two years over a corruption scandal;
  • Tennis is also currently undergoing a crisis as allegations of match fixing engulf the sport;
  • Cycling has for many years been dogged with allegations of illegal doping, with the issue only coming to a head when the International Cycling Union was accused of knowingly protecting Lance Armstrong – cycling’s long time poster boy – against doping allegations; and
  • Badminton, boxing, handball and other sports, including US collegiate sports, have all suffered from similar credibility gaps.

It is clear from this that there are serious underlying issues that sports NGOs need to address in order to clean up their respective sports.

Former Commonwealth Bank IT executive arrested for alleged receipt of corrupt payments

insider trading

An international investigation has led to the arrest of Keith Hunter, former general manger of information technology (IT) service management and operations at the Commonwealth Bank Australia (CBA). Hunter pleaded not guilty to charges of bribery. Over USD$1.5 million in corrupt payments relating to the case have been frozen.

Hunter is alleged to have been involved with granting a publicly-listed US technology provider a lucrative contract without first putting it to public tender, in return for bribes. Detectives have estimated the value of the illegal payments at tens of millions of dollars. A second former CBA manager is also wanted for questioning as part of the ongoing investigation.

CBA alerted NSW Police earlier this year to a possible corrupt relationship between the two men and the technology provider. The Bank had conducted its own internal investigations into what is alleged to be suspicious payments made to two of its senior IT managers.

The NSW Police Fraud and Cybercrime Squad has congratulated CBA on coming forward with their suspicions, warning that any corruption in the business community would not be tolerated. The Squad’s Commander, Detective Superintendent Arthur Katsogiannis, noted that the offence of corrupt commissions carries a seven-year jail sentence.

A CBA spokesperson has confirmed the Bank’s zero tolerance policy for any illegal activity by its employees.

The World Economic Forum estimates that bribery and corruption increases the cost of doing business by up to 10%.

GRC Solutions provides online compliance training courses in anti-bribery and corruption. We offer off-the-shelf courses as well as customisation.

Bribery and corruption takes its toll over Smith & Wesson Multi-National Corporation

bribery and corruption 

A recent case serves as a vital example of what small and medium sized businesses wanting to expand globally must first achieve in terms of governance, risk and compliance measures, to avoid bribery and corruption activities taking its toll on global operations.

In an out-of-court dispute between Smith & Wesson Holding Corporation and the US Securities and Exchange Commission to resolve Foreign Corrupt Practices Act offences, Smith & Wesson cooperatively agreed to pay a fine of $2 million.

Smith & Wesson, a US-based company was found guilty of paying bribes across the globe. According to the SEC, “Smith & Wesson’s international sales staff engaged in a pervasive effort to attract new business by offering, authorising, or making illegal payments or providing gifts meant for government officials in Pakistan, Indonesia and other foreign countries.”

Smith & Wesson consented to the order without admitting or denying the findings that show evidence of violating the anti-bribery, internal controls and books and records provisions of the Securities Exchange Act of 1934.
In addition to this large fine, Smith & Wesson has also been ordered to report to the SEC on its FCPA compliance efforts for the next two years.

This case demonstrates the challenges faced by corporations operating in multiple countries, no matter how well recognised they are. Even after 4-years of international operations keeping on top of compliance in all areas can be a struggle. This large penalty of $2 million serves as a warning to other organisations who are not vigorously looking into a compliance training program to educate their staff.

It is important to note that the SEC took into consideration Smith & Wesson’s cooperation with the investigation when determining an appropriate penalty. Smith & Wesson took effective remedial action straight after the conduct came to light by improving its internal controls and compliance process and also fired its entire international sales staff.

Don’t let undiscovered, illegal activities take place throughout your organisation. Ensure you are covered with an Anti-bribery and Corruption course.

Source: The FCPA Blog