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FIFA Scandal Calls for Transparency, Not Government

By: Contributor - May 31, 2015, 9:02 pm
FIFA. (@Fifacom_es)
FIFA is so large that it has more members than the United Nations. (@Fifacom_es)

The front pages of leading newspapers around the world are full with news about the alleged corruption in FIFA, the world soccer federation. There are fewer headlines in the United States, where the Justice Department brought a 47-count indictment against key authorities and a handful of businessmen.

International attention is assured: soccer is the most popular sport, and FIFA is so large that it has more members than the United Nations. After achieving independence, several countries, especially in Central and Eastern Europe, asked to be affiliated with FIFA even before asking to become members of the United Nations.

Among the FIFA officials charged with racketeering and wire fraud were two of the organization’s vice presidents, Eugenio Figueredo and Jeffrey Webb, as well as José Maria Marin, former president of the Brazilian Football Association, and Rafael Esquivel head of the Venezuelan soccer association. Most of the charges refer to activities of the South American FIFA subsidiary, CONMEBOL, and its North American counterpart, CONCACAF.

As a good Argentinean, Gustavo Lazzari, an economist and policy advocate with the Libertad y Progreso think tank, follows soccer as much as the battles to preserve the few economic freedoms that remain in Argentina. Argentina was the runner up in the last World Cup, but was ranked 169 out of 178 in economic freedom. Given that Argentineans are so exposed to corruption and soccer, and that he lectures frequently for free-market think tanks on the topic, I asked him about his views.

He said, “FIFA is the closest thing to a multilateral agency, like the World Bank, but with the additional power to regulate a formidable business. The economic and political appeal, especially when the global contests are organized in countries with weak rule of law, creates immense temptations for corruption.”

All the FIFA authorities who were detained were from the Americas, and mostly from countries with weak rule of law. But the fact that the accusations surface after the process that selected Russia and Qatar, with frequent but unproven bribery accusations, assures worldwide attention. President Putin questioned US involvement.

Corrupt dealings which damage non-US citizens can still be brought to justice here. In a piece, “How Did He Get So Rich”, I wrote about an Argentinean businessman who ended up in jail mostly because his partner was based in the United States and they used US financial institutions for their dubious operations. In this case, CONCACAF is based in the United States, so there is an additional justification to act. This is not enough to satisfy Putin who, as a piece in Forbes reported, blamed the United States for another attack on Russian interests.

What will happen next? Lazzari argues that this scandal might refresh the debate about what is more relevant: a world cup of soccer teams or a world cup of national teams. Libertarian globalists, tend to prefer the former, libertarian “nationalists” prefer the latter. I think there is room for both.

Lazzari points out that teams like Barcelona and Real Madrid (Spain), Chelsea (United Kingdom), Juventus (Italy), and many others, have fans and followers across the globe: “Barcelona soccer shirts with Messi’s name, and Real Madrid’s shirt with Ronaldo’s name, sell all over the world, much more than national team’s jerseys.” Messi and Ronaldo play outside their native countries and are some of the best strikers that the world has ever seen.

Those who love freedom even more than soccer hope government will not get more involved. Magno Karl, of the think tank Ordem Livre in Brazil, has been highly critical of state interference and subsidies for sporting events.

He argues that “the involvement of governments in the game should remain restricted to tightening vigilance over private entities that engage in criminal activities and prosecution of those accused of crimes. It is unlikely that more involvement in the organization of sporting events would produce more accountability. Instead, it would probably produce more US$900 million empty stadiums in developing countries, such as the National Stadium of Brasilia, in Brazil.”

US civil society and its government are familiar with private sector for-profit and nonprofit sport leagues. Incomes and profits on those events are regulated by the same laws that regulate non-sportive efforts. Violations, therefore, warrant prosecution, even if they might offend Putin.

Luis Loria, a think-tank leader from Costa Rica, commented that the revelations and detention of his compatriot Eduardo Li, calls for increased transparency. Loria said “The capture of Li, in Switzerland, has caused a media earthquake in the small ‘Central American Switzerland’ as some label Costa Rica. Until a few month ago, Li was considered as a role model and named the 2014 person of the year by the prestigious newspaper La Nación.”

Loria is the founder of IDEAS Network, which is creating an internet platform, “The Crystal House,” to increase transparency in government affairs. Eugenio Figueredo, from Uruguay, one of the FIFA vice presidents also detained, had been accused and suspected before. Uruguay, like Costa Rica, is also regarded as a regional “Switzerland.” FIFA’s president and headquarters are Swiss, so the comparison is not totally unfounded.

The battle against cronyism and corruption continues, this time in world soccer. No sector seems immune. Who knows what comes next, but please, counter it with transparency, not more regulations.

This article was originally published in Forbes.