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Thoughts on Corruption in FIFA and BiH: Structures and Incentives Matter

08 June 2015 by Valery Perry

 

DPC Blog Post

Thoughts on Corruption in FIFA and BiH: Structures and Incentives Matter

Valery Perry

June 2015

( BHS verzija - BCS version )

The news of criminal charges against 14 high-ranking FIFA officials and the ultimate resignation of the long-serving FIFA president has been interesting not only due to the long-rumored patronage, corruption and opaque operations of the football body. Reading and listening to commentary in the days since the story broke, anyone interested in politics in Bosnia and Herzegovina (BiH) might be forgiven for thinking that the news coverage is in fact directly referring to the ongoing post-war morass in that country.[1]

The following reviews a few quotes related to either FIFA or BiH – try to guess the references before reading further.

1. "……can operate with impunity with respect to corruption, human rights, and international geopolitics because it has very little external accountability…..[it] has shown, repeatedly, that it is just not up to the standards of good governance in the 21st century.”

This quote applied to FIFA, but could just as easily apply to BiH.[2]

The general lack of transparency in both FIFA and the highest (and for that matter, the lowest) echelons of BiH government are strikingly similar. Transparency International, has noted the following with regard to FIFA: "If you have a look at FIFA's accounts, you do not know where all the money went,'' says Deborah Unger of Transparency International's Corruption in Sport Initiative. "You don't know how much the senior executives get. They're very very lump-sum broad accounts."[3]

In its 2014 Progress Report for BiH, the EU noted very similar concerns: "… there is no consolidation of the budgets of State, Entities and other public sector bodies that would provide information as defined by EU requirements. The non-inclusion of extra-budgetary funds in particular prevents a clear view of the entire fiscal position. The budget process also lacks democratic legitimacy, as budgets are usually adopted in urgent procedure. Entity budgets frequently tend to undergo rebalancing over the year, which, given limited human resource capacity, leaves little time to improve the reporting process. This leaves the system vulnerable to abuse for political purposes.”[4]

If it’s true that sunlight is the best disinfectant, then it is clear that both FIFA and BiH would benefit from some direct rays, and some radical transparency.

2. "In the struggle for patronage or power they ally tactically with politicians loyal to incompatible projects against members of their own loyalty community.”

This quote was written about BiH,[5] but could also explain FIFA’s culture of deal-making. In both cases, the culture of patronage is inextricably linked to the election system that paves the way for leadership that is broadly unaccountable.

The very structure of FIFA, together with its election procedures, provides the governing body with an operating system that is custom-built for a culture of patronage. Much has been made of FIFA’s election rules, which accord each of the 209 members a vote, without regard to the size of the constituency of that representative (consider China and Montserrat). Such a system makes it very easy to curry favor in regional blocs open to subtle or not-so-subtle vote-buying, providing an incentive both for very small representatives to seek quid pro quo for their support, and for FIFA to patiently build blocks of loyalist supporters.[6] One observer has noted, "Like every populist who wants to create a more inclusive society and displace the old elite, Blatter had to create his own constituency,"by spreading more soccer wealth to countries in Africa, Asia, Central America and elsewhere, through local grandees whose fealty to Blatter would then be guaranteed.”[7] In the absence of checks or balances, or of sufficient internal dissent willing to rock a boat that enriches a large number of its members, by whatever means, ensures that the system is structured to ensure and continue its own viability. "This set-up is a breeding ground for the "rampant, systemic and deep-rooted" corruption cited by U.S. authorities Wednesday, as well as what fuels theelaborate networks of patronage that link the sport's top administrators with officialsin national soccer associations.”[8] As rational actors, nearly everyone has an incentive to keep the system as it is.

The election system in BiH is similarly structured to ensure that regular elections are inconsequential in terms of broad policy or promises. Due to a combination of ethnically-defined electoral units, the lack of any shared state-wide election candidates or slate of candidates, and an electoral law that discourages moderate and integrative politics, results-based outcomes or cross-faction voting, there has been remarkably little change in terms of political party options or agenda in the past 20 years. Political scientist John Hulsey has written about, "the persistence and even resurgence of political parties that espouse nationalist rhetoric. The domestic factors working against multi-ethnic, non-nationalist parties are very strong. The rise of the SNSD and SBiH as moderate parties and their subsequent leap to success when they embraced more extreme rhetoric strongly suggests that nationalist parties that moderate do so at the risk of losing their core constituency.” [9] These electoral dynamics are magnified when considered in the context of the post-war environment of deep distrust. Asim Mujkić and Hulsey liken voter choices and election dynamics to a kind of prisoner’s dilemma: "…it is possible for Bosnian voters to prefer a change from the current context and desire to remove ineffective politicians but still find it in their best interest to vote for incumbent nationalist because of their belief that the other side will vote nationalist.”[10] Therefore, in spite of pre-election polling that consistently shows voters stated an interest in change, the results are consistent – more of the status quo. The electoral systems in place affect voter strategy, options and outcomes.

3. "….ruleslike a sovereign monarch, undeterred by hostile public opinion.”

This reference refers to Sepp Blatter, FIFA’s long-serving and recently resigned president, but could equally apply to many of BiH’s leading politicians.[11]

Both cases demonstrate a startling lack of connection between leadership behavior, results and election to leadership positions, reflecting a lack of internal/organizational democracy. Even after the story of the FIFA arrests broke, and following on years of allegations of questionable practices in the governing body, Blatter was re-elected to a fifth term securing 133 of the 209 votes. He remained tone-deaf for several days, until finally announcing he would in fact step down. (His initial response that, "I’m not perfect, nobody’s perfect” was emblematic of his inability or unwillingness to understand the irony of such a declaration.[12]) His long-over-due fall is interesting for two main reasons. First, his long tenure in the face of increasing allegations of organizational misconduct, showed a lack of interest in even consideration the need for "new blood”, to demonstrate to fans (and corporate sponsors) a commitment to a new way of doing business. He lived in a self-reinforcing echo chamber of his own making. Second, the fact that he was even re-elected in the first place demonstrates that the 209-member voting body failed to make a connection between the recent bad press and his decade and a half leadership. There was no link between (re)election and accountability – other than money. The revenue that FIFA has reaped during his tenure apparently was all that mattered – a classic patronage model.

In this case perhaps FIFA’s primary advantage over BiH is that it knows who is - or purports to be - in charge, something BiH’s convoluted system makes difficult. Rather than one "sovereign monarch,” the BiH political system labors under multiple ethno-national monarchs, visible through both the three-headed Presidency, and the preferred position given to the three constituent peoples in all aspects of public life as the expense of broad citizen rights.[13] However, one sees the same "Teflon” phenomenon in BiH.[14] This is most visible in the centralized, vertically-structured Republika Srpska, though it is also a trend in the Federation. In spite of losing significantly after both the 2012 municipal and recent 2014 general elections, SNSD’s Milorad Dodik was recently re-elected. In spite of SDP’s trouncing in October, while then-president of the party Zlatko Lagumdzija stepped down, the fact that the "new choice” of Nermin Niksic was an old face unlikely to deviate from his predecessor’s party line suggests that, again, there is no linkage between the poor party performance and the leaders at the helm. It is more likely for a disgruntled party member to leave their party to start their own spin-off than for a party to go through an internal shake-up – witness Zeljko Komsic and the Democratic Front, the HDZ/HDZ 1990 split, etc.[15] This stands in contrast to the recent example of the United Kingdom, where hours after his party’s trouncing, Labor party leader Ed Miliband stepped down from this leadership role, acknowledging his failure in both sketching out a vision for the country and attracting votes. If elections don’t have consequences, then citizens – anywhere – will increasingly feel disengaged from the political system.

Whither FIFA, Whither BiH…..

The FIFA controversy will unfold over the months and years ahead as the cases are prosecuted, as more information is made public, and, potentially, as more insiders come out with details on the internal workings of the body. There have been signs that while the internal incentives for cleaning house may be weak, external actors – namely multinational corporate sponsors – may be increasingly sensitive to the charges and the potential impact on their own reputation and brand.[16] It gets harder to peddle sneakers and energy drinks when television viewers are reminded of the fact that well over a thousand people have died to date in preparations for the 2022 Qatari World Cup.[17]

Over the past two decades, since the end of the war, it has become abundantly clear that BiH lacks the internal incentive structure needed to enable a more accountability and responsive democracy to consolidate. The dynamics of fear and patronage have colluded to divorce elections and governance from results, reform and improved standards of living. As with FIFA, in the absence of internal drivers of change, it could be possible for relevant external forces to coalescence in BiH to catalyze a process of reform from the outside in. One might assume that the EU would be in the pole position to ensure high standards through conditionality. To date this has not meaningfully changed the behavior of ruling elites, perhaps due to the at times seemingly optional nature of conditions, and the EU’s preference for stability (read: stagnation) and aversion to necessary but potentially disruptive "red lines.”[18] The EU, together with the broader international community, also has the potential to limit the money coming into the country unless meaningful and implemented steps to limit corruption are enacted; to date funds continue to pad the country’s budgets from the IFIs and bodies such as the EBRD, though high-level corruption allegations remain rife.

Both FIFA and BiH are a reminder that in every system, actors are rational – they will work and maneuver within the guiderails provided, and will either be constrained by checks and balances in place to ensure transparency and accountability, or will enjoy the free-for-all of the oversight vacuum.


[1] Laurence Cooley and Jasmin Mujanovic have written on international football administration and BiH. See "Changing the Rules of the Game: Comparing FIFA/UEFA and EU Attempts to Promote Reform of Power-Sharing Institutions in Bosnia-Herzegovina.” Global Society, 17 November 2014.

[2] "FIFA can operate with impunity with respect to corruption, human rights, and international geopolitics because it has very little external accountability.The organization has shown, repeatedly, that it is just not up to the standards of good governance in the 21st century.” Pielke Jr., Roger. "Can FIFA’s Corruption Be Stopped?” Foreign Policy. 16 November 2014. Available at http://foreignpolicy.com/2014/11/16/can-fifas-corruption-be-stopped/; Pielke Jr. Roger. "How Can FIFA be Held Accountable?” Sport Management Review. Vol. 16, 2013 pp.255-267. Available at http://sciencepolicy.colorado.edu/admin/publication_files/2013.01.pdf

[3] Troop, William. "What if FIFA and What’s this Corruption Scandal All About?” Public Radio International. 28 May 2015. Available at http://www.pri.org/stories/2015-05-27/what-fifa-and-whats-corruption-scandal-all-about

[4] European Commission Progress Report for Bosnia and Herzegovina, 2014, p. 11. Available at http://ec.europa.eu/enlargement/pdf/key_documents/2014/20141008-bosnia-and-herzegovina-progress-report_en.pdf

[5] "Bosnia’s Future. International Crisis Group Europe Report No 232. 10 July 2014. P. 9. Available at http://www.crisisgroup.org/~/media/Files/europe/balkans/bosnia-herzegovina/232-bosnia-s-future.pdf

[6] Bialik, Carl. "How FIFA’s Structure Lends Itself to Corruption.” FiveThirtyEightSports. 27 May 2015. Available at http://fivethirtyeight.com/features/how-fifas-structure-lends-itself-to-corruption/

[7] Tharoor, Ishaan. "It’s Not Corruption that Keeps FIFA’s Seth Blatter in Power. It’s History.” The Washington Post. 29 May 2015. Available at http://www.washingtonpost.com/blogs/worldviews/wp/2015/05/29/its-not-corruption-that-keeps-fifas-sepp-blatter-in-power-its-history/

[8] Tharoor, Ishaan. "How FIFA Became the World’s Most Powerful and Loathed Sports Organization.” The Washington Post. 27 May 2015. Available at http://www.washingtonpost.com/blogs/worldviews/wp/2015/05/27/how-fifa-became-the-worlds-most-powerful-and-loathed-sports-organization/

[9] Hulsey, John. "Why Did they Vote for Those Guys Again?’ Challenges and Contradictions in the Promotion of Political Moderation in post-war Bosnia and Herzegovina.” Democratization. Vol. 17, No. 6, 2010, p. 1146.

[10] Mujkić, Asim and John Hulsey. "Explaining the Success of Nationalist Parties in Bosnia and Herzegovina. Politicka Misao. Vol., 47, no. 2, 2010, p. 151.

[11] "Its head, FIFA President Sepp Blatter — who was not among those arrested — ruleslike a sovereign monarch, undeterred by hostile public opinion.” http://www.washingtonpost.com/blogs/worldviews/wp/2015/05/27/how-fifa-became-the-worlds-most-powerful-and-loathed-sports-organization/

[12] Gibson, Owen. "Sepp Blatter Re-elected as FIFA President for a Fifth Term. The Guardian. 29 May 2015. Available at http://www.theguardian.com/football/2015/may/29/sepp-blatter-reelected-fifa-president-fifth-term

[13] European Commission for Democracy Through Law (Venice Commission), Opinion on the Constitutional Situation in Bosnia and Herzegovina and the Powers of the High Representative, CDL-AD (2005) 004 2, Mar. 11, 2004, available at http://www.venice.coe.int/docs/2005/CDL-AD(2005)004-e.pdf.

[14] This term, used often in American politics, refers to a politician’s ability to deflect charges of scandal and corruption. See The Political Dictionary, available at http://politicaldictionary.com/words/teflon-coated-presidency/

[15] Hulsey, John. "Party Politics in Bosnia and Herzegovina.” Keil, Soeren and Valery Perry (eds.). Statebuilding and Democratization in Bosnia and Herzegovina. Ashgate, 2015 (forthcoming).

[16] Tuchman, Robert. "FIFA Sponsors Sent Scrambling.” Forbes. 2 June 2015. Available at http://www.forbes.com/sites/roberttuchman/2015/06/02/fifa-sponsors-sent-scrambling/; Earlier in the year FIFA lost a number of sponsors concerns about allegations of misconduct. Gibsen, Owen. "Scandal-hit FIFA Loses Three More Major Sponsors.” The Guardian. 23 January 2015. Available at http://www.theguardian.com/football/2015/jan/23/fifa-lose-three-sponsors-castrol-continental-tyres-johnson-and-johnson

[17]Ingraham, Christopher. "The Human Toll of FIFA’s Corruption.” The Washington Post. 27 May 2015. Available at http://www.washingtonpost.com/blogs/wonkblog/wp/2015/05/27/a-body-count-in-qatar-illustrates-the-consequences-of-fifa-corruption/

[18] For background information see Bassuener, Kurt, Valery Perry and Toby Vogel. "Retreat for Progress? The German-British Initiative.” Democratization Policy Council. November 2014. Available at http://www.democratizationpolicy.org/pdf/briefs/DPC%20Policy%20Paper%20-%20Retreat%20for%20Progress%20in%20BiH.pdf