What can companies take away from the United States Department of Justice's arrest of several senior FIFA officials last week, and ongoing investigation into corruption in soccer? Indictments were issued against 14 individuals and seven were arrested last Wednesday on charges of racketeering, wire fraud and money laundering conspiracies, among other charges; the DOJ has also indicated more indictments are likely. Although FIFA has often faced rumours of corruption, the arrests – which led this week to the resignation of long-time FIFA President Sepp Blatter – are relatively unprecedented, and reflect an increase in enforcement in recent years which has seen increased attention and sanctions for corruption more generally, most notably the ramp up in Foreign Corrupt Practices Act ("FCPA") enforcement. The FIFA arrests raise several issues companies should be live to more generally in anti-corruption compliance.
Government vs. Private Corruption
FIFA is an interesting case in that, while maintaining regulatory structures similar to a government organization, it is technically a private entity. Since international anti-corruption legislation generally focuses of government corruption – the UK Bribery Act bans bribery of private officials, but both the FCPA and Corruption of Foreign Public Officials Act ("CFPOA") are restricted to public corruption – companies are generally most sensitive to anti-corruption risks when dealing with government officials. However, the FIFA arrests serve as an important reminder that companies may be held liable for private corruption as well, in particular under domestic legislation. The FIFA defendants were charged not under international anti-corruption law but rather with racketeering, wire fraud and money laundering conspiracies, among other offences. In Canada, defendants might similarly be charged with offences such as fraud or conspiracy under sections 380 and 465 of the Criminal Code.
Individual vs. Corporate Responsibility
The FIFA indictments generally focus on individual rather than corporate defendants. The arrest of sports marketing executives in particular reinforces the notion that members of management can be charged for illicit activities in the course of business. For example, the CFPOA imposes imprisonment of up to 14 years on individual defendants. Conversely, companies need to be aware that anti-corruption violations by employees may result in criminal responsibility for the organization. In addition to the FIFA indictments, the Department of Justice unsealed guilty pleas by two corporate defendants for wire fraud conspiracy. In the Canadian context, the burden on companies to ensure their employees are complying with anti-corruption legislation has been heightened in light of the recent Pétroles Global decision, which establishes that wrongdoing by middle management can constitute the directing mind of the company for the purpose of corporate criminal responsibility.
The FIFA indictments are somewhat notable for their focus on demand-side enforcement, targeting several football officials as the recipients of bribes rather than the payers. Although domestic legislation imposes criminal responsibility on the recipient side, for instance accepting bribes or committing frauds on the government under sections 119(1)(a) or 121(1)(a)(ii) of the Criminal Code, international anti-corruption law has generally focused on punishing those paying bribes rather than those receiving them. The OECD Guidelines for Multinational Enterprises list as the primary goal of the OECD instruments to "eliminate the 'supply' of bribes to foreign public officials," and this is reflected in both the FCPA and CFPOA, which make it an offence to provide a foreign public official with an illicit benefit but do not impose responsibility on the recipients of such bribes.
Demand-side enforcement is arguably to the benefit of companies wishing to do business in high-risk areas, since it decreases the incentive for officials to request undue benefits, removing potential roadblocks for companies wishing to do business effectively without facing compliance risks. Anti-corruption violations are often initiated by foreign officials requesting bribes rather than companies offering them, but companies are nonetheless responsible for any violations. Increased enforcement of officials demanding or accepting bribes may therefore ease the burden on companies attempting to do business effectively within the confines of anti-corruption compliance.
Notwithstanding the above, companies should be live to the risks posed when organizations with which they do business are accused of anti-corruption violations. Where business partners or government bodies with which companies do business have been subject to regulatory attention, companies should take all appropriate steps to ensure they do not face enforcement themselves. This includes undertaking internal investigations and retaining counsel to ensure the company's interests are protected. It may also be advisable for companies aware of potential violations to pre-emptively prepare for regulatory attention, including measures such as putting litigation holds in place for employees with potentially relevant documents and establishing procedures to follow in the event of regulatory measures such as execution of search warrants.
Above all, it is important for companies to follow best practices such as ensuring they have robust anti-corruption compliance programs in place, keeping proper oversight that bribes are not being paid by lower-level employees, and keeping proper books and records to establish that any payments are properly made.
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