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FIFA and Switzerland’s changing role in global corruption enforcement

As we have said so many times before, the first step in addressing corruption is convincing the world that systemic corruption is not an immutable feature of human society.

That we can take effective steps to reduce it; that it should become the exception rather than the rule. And where those attitude changes begin to occur at the grass roots level, institutional changes will follow in their wake. Like Brazil. Or China.

Or, now, like Switzerland.

And why is Switzerland so important? Despite the recent ranking of its public sector as among the top five least corrupt in the world, Switzerland has been a hub for illegal international financial activity. The importance to the global anti-corruption effort of effecting cultural and institutional change in Switzerland can hardly be overstated. 

Note that the U.S. to this point has only indicted individuals based in North and South America; we have not been able to reach the African, European, and Asian transactions. Why? 

Probably for several reasons, chief among them being the jurisdictional constraints of U.S. law. The other actors will tend to use far less often  the U.S. wires for their illicit financial transactions, and wire usage has provided the jurisdictional basis for the FIFA indictments on honest services wire fraud, racketeering, and money laundering. The U.S. simply can’t do this alone. We need Switzerland. And Switzerland is now stepping up, in a huge way.

The change has been several years in the making. Beginning in 2008 the U.S. forcefully, and bluntly, began to prosecute Swiss banks and bankers for enabling tax evasion by U.S. account holders. Then in 2010 we enacted the Foreign Account Tax Compliance Act (FATCA) which imposed a 30% tax on US investments for foreign banks that refused to disclose the names of U.S. account holders. These steps generated significant controversy in Switzerland; we saw push back in the media, with allegations of cultural imperialism and bullying. The Swiss seemed divided on whether Swiss banking secrecy should end.

And though I have seen no data, I strongly suspect that Swiss media and citizenry are generally far more supportive of the FIFA investigations. If we could compare Swiss support for the UBS indictments or FACTA, compared with their support for the FIFA indictments, I’d expect to see a significant difference. Soccer elicits the world’s sympathy in ways that abstruse discussions of global finance cannot. Even in Switzerland.  And with the opening of criminal proceedings against Sepp Blatter, look at the difference it’s making.

I was totally stunned and speechless when, in a recent lesson on corruption in my International Business Transactions course, a very smart German exchange student raised his hand and said, “on behalf of all European soccer fans, please let me say, thank you, United States, for taking the lead in addressing FIFA corruption.”

Let me tell you that I have taught courses on international business law for many years, in countries all around the world. And I have never heard anyone thank the United States for anything. Literally.

And consider: FIFA has more member nations than the U.N. It may be the world’s most inclusive governance organization. As an instrument for changing worldwide attitudes and institutions in relation to corruption, one could hardly imagine a better-suited tool than FIFA.

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Andy Spalding is a Senior Editor of the FCPA Blog and Associate Professor at the University of Richmond School of Law.

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2 Comments

  1. Unfortunately it probably is just a showcase. FIFA is an extremely appealing low hanging fruit for that.

  2. In my humble opinion, corruption and money laundering greatly affect the socio-economic development of most developing and underdeveloped countries. Look at the millions of people who suffer at the hands of their corrupt political leaders in the Middle East, South America and Asian countries. They face high unemployment rate, poor infrastructure and medical care, human trafficking, mass migration, quality of life leaves much to be desired etc. Millions are stashed up in the vaults of Swiss Banks. How could this happen? Should not these financial institutions comply with the KYC rules? From various articles that surfaced of late, banks in Switzerland have been described as ML vehicles and custodians for most corrupt world leaders. Should not Swiss banks join in to fight money-laundering?


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