By Rebekah Mintzer, From Corporate Counsel

It’s been a tough week for international soccer’s governing body, FIFA. On Wednesday, the U.S. Department of Justice issued a serious red card: indictments against 14 major figures tied to or directly working for the organization.

These folks stand accused of turning “the beautiful game” into a corrupt one. The DOJ alleged that they partook in bribery and racketeering, issuing systemic bribes around media rights and marketing rights associated with soccer matches, and around FIFA votes, including the decision about where to hold the 2010 World Cup. (It was hosted by South Africa.) The officials transferred this illicit money sometimes by handing out cold hard cash and other times through more complex means, such as shell companies and hidden foreign bank accounts.

Law departments and compliance officers should hope that they never find their companies in such a mess. But there are a few lessons they may take from this legal and reputational disaster:

1. Whistleblowers Are Scoring Points

A major contribution to the DOJ’s case against FIFA reportedly came from Charles Blazer, a former high-ranking FIFA official who went as far as wearing a wire to catch the organization’s corrupt behavior in action. And he isn’t the first person to speak to the U.S. government about FIFA’s alleged misdeeds.

As Stephen M. Kohn, executive director of the National Whistleblower Center and co-founder of whistleblower law firm Kohn, Kohn & Colapinto, points out, the U.S. government is perfectly willing to look far outside its borders to find someone who will blow the whistle. “Whistleblower laws are open for business worldwide,” Kohn told CorpCounsel.com. In fact, the largest whistleblower award yet, handed out by the U.S. Securities and Exchange Commission and totaling $30 million, was given to an employee abroad last September.

The situation is even more difficult, Kohn added, because in other regions, such as Europe, there often is little emphasis on internal anti-corruption compliance efforts because the legal and enforcement framework is not nearly as stringent. “It’s really night and day in terms of what we see culturally in the workforce,” said Kohn. More opportunity for corrupt practices means more opportunity for employees to let the government know if something’s afoot.

2. U.S. Authorities Are Playing Offense on Suspicious Transactions

The DOJ action against FIFA looks to be indicative of a shift toward cracking down on potentially corrupt cross-border transactions committed by people beyond just foreign government officials covered by the Foreign Corrupt Practices Act.

“What’s happened over time, through efforts on the part of U.S. agencies to grow their abilities and enhance their ability to investigate FCPA and counterterrorism cases, is that the agencies have developed far more sophisticated processes and expertise for following the money,” William Barry, co-chairman of Richards Kibbe & Orbe’s litigation department, told CorpCounsel.com.

Barry pointed out that recently government enforcers have made room in their ranks for experts who understand cross-border transactions. Within the last few years, for example, the FBI has significantly increased staff in its foreign corruption unit, and the DOJ has launched its Kleptocracy Asset Recovery Initiative, which helps recover funds stolen due to foreign corruption.

Also allowing the enforcers to take a more offensive stance is growing reporting of suspicious activity under the Bank Secrecy Act, which requires financial institutions that see a potentially problematic transaction to come forward. Barry explained that due to increased oversight from the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, financial institutions are submitting reports on a closer to real-time basis, speaking up when a transaction looks suspicious, and not waiting until it has actually become a problem. “There’s just a lot more data out there now because of the suspicious activity reporting process,” Barry said.

3. Compliance Must Go Beyond the Playbook

The corruption allegedly going on at FIFA came from the organization’s highest levels, which might have made it more challenging to root out. When the “tone from the top” is a corrupt one, it’s easy for an unethical culture to spread to the rest of the organization.

In any case, just having a compliance program on paper is not enough. “It is an entirely different matter to make sure [policies and procedures] are implemented effectively, that you can audit them, that you can fix them when they break down,” said Barry.

Barry cited culture, training and monitoring as three essential elements of a program that works. Even if it sounds like a lot of oversight, he explained, monitoring can be integral to spotting corrupt transactions before they become a massive problem. This may include regular review of emails or taking a look at employee financial dealings that may have ramifications for the organization.

IMAGE: Photo: Danilo Borges / Portal de la Copa, via Wikimedia Commons

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