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Required: (a) Identify which stakeholders were impacted by Blatter's leadership at FIFA of the above case. (b) Discuss the failures identified in corporate governance in the above case. (c) Report any evidence of good corporate. Governance in the above case.

Required: (a) Identify which stakeholders were impacted by Blatter's leadership at FIFA of the above case. (b) Discuss the failures identified in corporate governance in the above case. (c) Report any evidence of good corporate. Governance in the above case.

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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A SPECTACULAR DOWNFALL The sport of soccer, known as football outside of North America, was tarnished by evidence of bribery and corruption at FIFA, football's global governing body. In particular, the culture created under FIFA's defiant president, Joseph "Sepp" Blatter, appeared to endorse greed on a spectacular scale as votes from FIFA delegates were allegedly made available for sale as countries sought to win the rights to host the World Cup every four years. When 14 FIFA officials were arrested in their Zurich, Switzerland, hotel rooms on May 27, 2015, on the eve of a congress meeting, the world of soccer was taken by surprise, especially since those arrests were made at the request of the U.S. Department of Justice (DOJ). By December 2015, a total of 16 officials had received a 92-count indictment on criminal charges including racketeering, money laundering, and wire fraud amounting to more than $150 million over the past 24 years. The money was allegedly received from national sports associations seeking to influence the appointment of host cities for World Cup championships, and from companies with commercial connections to FIFA seeking "lucrative media and marketing rights" to FIFA tournaments. The scheduled World Cup championships in Russia (2018) and Qatar (2022) came under particular scrutiny, with the award to Qatar raising the most suspicions, since football would be a very difficult sport to play in the average 100 to 115 degree heat and stifling humidity of a Qatari summer. THE BLATTER REIGN While the DOJ arrests prompted worldwide media coverage, sports media journalists and officials were less surprised. Blatter's 17-year reign as FIFA's eighth president had been married by frequent allegations of corruption from the day he won the office in 1998 after serving 17 years as the top deputy to the retiring president, Joao Havelange. The vote against his Swedish rival, Lennart Johansson, was very close, leading to bribery allegations that were proven. Toward the end of his first term in office, Blatter was implicated in the bankruptcy of FIFA's marketing partner, International Sports and Leisure (ISL) that collapsed with debts of more than $100 million. While investigations verified kickbacks to FIFA executives amounting to tens of millions of dollars, Blatter walked away with an assessment of "clumsy" conduct but no evidence of criminal or unethical behaviour. Over the next decade, Blatter was connected to numerous scandals related to bribes, financial mismanagement, and highly questionable tactics during re-election campaigns, but emerged unscathed. In 2011, FIFA convened an independent panel to propose governance reforms in the face of increasing criticism over the conduct of Blatter and his team of senior executives. Recommendations of fixed terms, age limits, and increased transparency of association finances were ignored. Those that sought to challenge Blatter in elections or in the proposal of policy changes were rewarded with a swift departure from the organization. It is a testament to Blatter's apparent control over FIFA that he was re-elected for a fifth term as president immediately following the May 27, 2015, arrests. He responded to the actions of the DOJ and British media in covering the story by saying: "I forgive but I don't
Transcribed Image Text:A SPECTACULAR DOWNFALL The sport of soccer, known as football outside of North America, was tarnished by evidence of bribery and corruption at FIFA, football's global governing body. In particular, the culture created under FIFA's defiant president, Joseph "Sepp" Blatter, appeared to endorse greed on a spectacular scale as votes from FIFA delegates were allegedly made available for sale as countries sought to win the rights to host the World Cup every four years. When 14 FIFA officials were arrested in their Zurich, Switzerland, hotel rooms on May 27, 2015, on the eve of a congress meeting, the world of soccer was taken by surprise, especially since those arrests were made at the request of the U.S. Department of Justice (DOJ). By December 2015, a total of 16 officials had received a 92-count indictment on criminal charges including racketeering, money laundering, and wire fraud amounting to more than $150 million over the past 24 years. The money was allegedly received from national sports associations seeking to influence the appointment of host cities for World Cup championships, and from companies with commercial connections to FIFA seeking "lucrative media and marketing rights" to FIFA tournaments. The scheduled World Cup championships in Russia (2018) and Qatar (2022) came under particular scrutiny, with the award to Qatar raising the most suspicions, since football would be a very difficult sport to play in the average 100 to 115 degree heat and stifling humidity of a Qatari summer. THE BLATTER REIGN While the DOJ arrests prompted worldwide media coverage, sports media journalists and officials were less surprised. Blatter's 17-year reign as FIFA's eighth president had been married by frequent allegations of corruption from the day he won the office in 1998 after serving 17 years as the top deputy to the retiring president, Joao Havelange. The vote against his Swedish rival, Lennart Johansson, was very close, leading to bribery allegations that were proven. Toward the end of his first term in office, Blatter was implicated in the bankruptcy of FIFA's marketing partner, International Sports and Leisure (ISL) that collapsed with debts of more than $100 million. While investigations verified kickbacks to FIFA executives amounting to tens of millions of dollars, Blatter walked away with an assessment of "clumsy" conduct but no evidence of criminal or unethical behaviour. Over the next decade, Blatter was connected to numerous scandals related to bribes, financial mismanagement, and highly questionable tactics during re-election campaigns, but emerged unscathed. In 2011, FIFA convened an independent panel to propose governance reforms in the face of increasing criticism over the conduct of Blatter and his team of senior executives. Recommendations of fixed terms, age limits, and increased transparency of association finances were ignored. Those that sought to challenge Blatter in elections or in the proposal of policy changes were rewarded with a swift departure from the organization. It is a testament to Blatter's apparent control over FIFA that he was re-elected for a fifth term as president immediately following the May 27, 2015, arrests. He responded to the actions of the DOJ and British media in covering the story by saying: "I forgive but I don't
forget". However, when the extent of the alleged malfeasance was made public. Blatter announced his resignation from the presidency four days later, declaring that: "FIFA needs a profound restructuring." The beginning of the end for Blatter came on September 25,2015, when Swiss investigators issued criminal proceedings against him in relation to the assignment of valuable World Cup television rights to former FIFA official Jack Warner for a fraction of their true value. The contract dated back to 2005 when the Carribbean broadcast rights for the 2010 and 2014 World Cups were sold to Warner for a mere $600,000. He then sold those rights to a Jamaica based cable television station for an alleged $15 million to $20 million profit. THE END OF A DARK ERA In the face of mounting allegations against Blatter, long time FIFA sponsors, including McDonald's, Visa, Coca-Cola, and Anheuser-Busch InBev, began calling for Blatter to sever all ties with FIFA, labelling him as an obstacle to reform. Blatter remained defiant, even in the face of a formal suspension by the organization's ethics committee for 90 days. On December 21, 2015, Blatter and Michel Platini, the president of UEFA, European football's governing body, were found guilty of ethics violations by FIFA's ethics committee and barred from the sport for eight years. Both men appealed the decision to the Court of Arbitration for Sport, and their ban was reduced to only six years. On February 25, 2016, 45-year-old Gianni Infantino, the former general secretary of UEFA, was appointed as Blatter's successor as the ninth president of FIFA on a platform that committed to restoring "the image of FIFA and the respect of FIFA." Blatter, who turned 80 in March 2016, announced: "With the adoption of [reforms), expectations on him will be even higher. But I am convinced that my successor will put them in place. had this burden on me. And now it is finished." In June 2018, Blatter attended the World Cup in Russia as the invited guest of President Vladimir Putin in spite of his six-year ban. When asked about how the visit would be perceived by FIFA, Blatter responded: "It will be a sporting and diplomatic mission for me." Required: (a) Identify which stakeholders were impacted by Blatter's leadership at FIFA of the above case. (b) Discuss the failures identified in corporate governance in the above case. (c) Report any evidence of good corporate. Governance in the above case.
Transcribed Image Text:forget". However, when the extent of the alleged malfeasance was made public. Blatter announced his resignation from the presidency four days later, declaring that: "FIFA needs a profound restructuring." The beginning of the end for Blatter came on September 25,2015, when Swiss investigators issued criminal proceedings against him in relation to the assignment of valuable World Cup television rights to former FIFA official Jack Warner for a fraction of their true value. The contract dated back to 2005 when the Carribbean broadcast rights for the 2010 and 2014 World Cups were sold to Warner for a mere $600,000. He then sold those rights to a Jamaica based cable television station for an alleged $15 million to $20 million profit. THE END OF A DARK ERA In the face of mounting allegations against Blatter, long time FIFA sponsors, including McDonald's, Visa, Coca-Cola, and Anheuser-Busch InBev, began calling for Blatter to sever all ties with FIFA, labelling him as an obstacle to reform. Blatter remained defiant, even in the face of a formal suspension by the organization's ethics committee for 90 days. On December 21, 2015, Blatter and Michel Platini, the president of UEFA, European football's governing body, were found guilty of ethics violations by FIFA's ethics committee and barred from the sport for eight years. Both men appealed the decision to the Court of Arbitration for Sport, and their ban was reduced to only six years. On February 25, 2016, 45-year-old Gianni Infantino, the former general secretary of UEFA, was appointed as Blatter's successor as the ninth president of FIFA on a platform that committed to restoring "the image of FIFA and the respect of FIFA." Blatter, who turned 80 in March 2016, announced: "With the adoption of [reforms), expectations on him will be even higher. But I am convinced that my successor will put them in place. had this burden on me. And now it is finished." In June 2018, Blatter attended the World Cup in Russia as the invited guest of President Vladimir Putin in spite of his six-year ban. When asked about how the visit would be perceived by FIFA, Blatter responded: "It will be a sporting and diplomatic mission for me." Required: (a) Identify which stakeholders were impacted by Blatter's leadership at FIFA of the above case. (b) Discuss the failures identified in corporate governance in the above case. (c) Report any evidence of good corporate. Governance in the above case.
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