Organizations will continue to be corrupt if it makes more money than compliance.
In the past few weeks, there have been plenty of corruption allegations directed at FIFA after its president Gianni Infantino announced plans to sell off stakes in the World Cup to private investors. This is just the latest in a long string of FIFA scandals that have emerged this summer.
This latest scandal, however, has been met by strong action from governing football bodies across the globe that seriously threatens the profitability of the tournament. I think it proves a wider problem with corporate governance: nothing happens to poor governance until profits are jeopardized, because there is simply no incentive to change.
Fan protests did not dent FIFA's revenue
Prior to the World Cup, I saw growing speculation of fans not watching the tournament in protest of the various commercial controversies surrounding it. The same speculation happened prior to Qatar 2022.
In both instances, football was played, and the fans were watching, even after the widespread discontent that surrounded the suspension of US striker Folarin Balogun's one-game ban. In both instances, FIFA announced record-breaking revenue.
I think this is a significant problem that isn't unique to football.
Fines are a cost of doing business
In many instances, allegations go beyond public criticism and result in formal investigations and hefty fines. This might work for smaller bodies but for some of the world's largest organizations these traditional punishments are little more than a cost of doing business.
In 2022, Glencore were fined £281 million (approx. $375 million), the largest fine ever issued by a UK court, following an investigation into $25 million worth of bribes in Africa that granted them preferential access to oil. For a mining company worth roughly $85 billion amid a global boom in raw materials, that fine was trivial.
Even with further fines worth up to $1.2 billion to the US, DR Congo, Brazil and Switzerland, Glencore's financial security remains intact.
A financial slap on the wrist is simply not enough for the likes of Glencore and FIFA. It is only when their commercial appeal and legitimacy is seriously affected that they will enact any change.
Until integrity becomes more profitable than misconduct, corruption will remain a rational business strategy.
How a collective boycott changed FIFA's calculation
UEFA, together with CONCACAF and AFC, represent a substantial proportion of the commercial value and sporting legitimacy of FIFA competitions, so their collective boycott seriously threatened the profitability of Infantino's proposed World Cup sale plan.
That coordinated opposition demonstrated how collective stakeholder action can create meaningful economic pressure, and the plan's abandonment suggests that the pressure played a significant role.
Integrity has to pay more than misconduct
However, FIFA operates on the global stage, through a federated governance structure. That can be difficult to replicate at the local level, and so systemic change cannot depend solely on collective stakeholder action.
To see lasting, tangible reform, integrity and compliance need to become the more attractive strategy.
That, though, can only be achieved when the rewards for good governance outweigh the benefits of misconduct. Coordinated stakeholder action is just one tool for this, but it should be accompanied by more robust regulations, investor pressure, and enforceable governance mechanisms.
Until integrity becomes more profitable than misconduct, corruption will remain a rational business strategy.
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