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Brook Horowitz on FIFA and beyond: The clean up can start here

The FIFA scandal reminds us that corruption remains embedded right at the top of some of the world’s institutions. And it’s not only FIFA: the almost daily reports of fines for the major Western banks for failing to prevent money laundering, or for foreign exchange and interest rates manipulation — crimes dating back to the financial crisis — show the extent to which corruption is part of the normal operating mode of transnational institutions, whether public or private.  

It’s not surprising that people are crying “foul,” and that G7 governments are feeling the pressure to do something about it. The British Prime Minister’s call for action against corruption at the G7 meeting in Bavaria is timely.

However the unravelling of Blatter’s empire points to another, more concerning, truth: at Blatter’s re-election as President of FIFA, despite the timing of the arrests of FIFA officials, and the enormous pressure on the organisation, the vast majority of developing countries’ representatives voted for him. Whatever their motivation, the fact was that, in their vote on the day, as in their supervision of the organization in the years leading up to it, they felt able to turn a blind eye to the issue of corruption.

The vote shows up a fault-line in the world’s consciousness about corruption. If corruption in FIFA or in the West’s leading financial institutions took so many years to be exposed, how long will it take in developing countries with weak rule of law and civil society? What scale of corruption will be found there once it is exposed? How do the G7 countries and their global multinationals set the right example and make change happen?

A good place to start would be the G20. After all the G20 includes the world’s largest emerging economies, which are still in the process of development and are distinguished by a serious corruption problem.

As a group, the G20 has already placed corruption firmly on its agenda. The G20’s Anti-corruption Action Plan 2015-2016 includes a number of useful measures designed to harmonise policies and coordinate the countries’ approaches. For example, last year, under the Australian Presidency, the G20 governments signed up to the G20 High-Level Principles on Beneficial Ownership Transparency, based on similar principles adopted by the G7 the previous year. Other areas of cooperation include asset recovery, denial of entry and safe haven to corrupt officials, mutual legal assistance and extradition.

However, governments cannot tackle corruption alone but need to harness all parts of society. A “collective action” approach bringing together the efforts of the governments, civil society and business, would make a real difference.

For example, civil society plays a crucial role in exposing wrong-doing by business and governments, as well as promoting the benefits of clean governance and responsible business to officials, managers and the public at large. Yet in many countries, NGOs are often lack expertise and resource to be truly effective. Why not allocate a modest percentage of the massive settlements and penalties that are generated from prosecuting successful corruption cases to NGOs raising anti-corruption awareness in the countries where the crimes were committed?

Business, often the partner in crime of corrupt dealings, can and should be encouraged to become a critical part of the solution. Multinational companies from the developed world, highly exposed to prosecution under their domestic anti-bribery legislations, have the resource and knowledge to resist corruption, and should ensure that their suppliers and distributors in developing markets to insist that they operate to the highest international standards. Major investors should be advocating to governments and companies in developing countries the economic benefits of a level-playing field. And the world’s leading global companies should have the courage to withdraw their investments and financial support from overtly corrupt countries and governments.

A new culture of intolerance to corruption would contradict the implication of that now infamous FIFA vote, namely that corruption is acceptable if it facilitates investment and development.

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Brook Horowitz is a contributing editor of the FCPA Blog. He’s the CEO of IBLF Global, a not-for-profit promoting responsible business practices worldwide. Since 2013, he has played an active role in the work of the B20, a multi-stakeholder dialogue between the companies and governments of the G20 countries, and is currently a co-chair of the B20 Anti-Corruption Task Force. His comments are made in a private capacity and do not necessarily reflect the views of the B20.

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