Author: Steven Bank
In response to an unprecedented crisis that has been called “the World Cup of Fraud,” the Fédération Internationale de Football Association, or FIFA, has undertaken a series of reform measures in the last several years. Most of these reforms have focused on attempting to break the cycle of corruption among football insiders by bringing in more outsiders, including independent chairs of both the Ethics Committee and Audit and Compliance Committee, as well as individuals to serve in executive positions who had not previously been involved in the sport at any level. Such an outsider-focused reform strategy takes a page from the US corporate governance playbook, which has increasingly come to rely upon independent directors as a way to keep the interests of management insiders aligned with the interests of shareholders.
This Article argues that, rather than focusing on bringing in more outsiders, FIFA should harness the power of insiders. The evidence is mixed as to whether independent directors are effective in public corporations, but it is even less clear in the case of nonprofit corporations where there are no stockholders to which the independent directors report. This model is particularly inappropriate in the case of FIFA, which does not even have the donors or government oversight that are present in US nonprofits. By contrast, FIFA insiders were instrumental in spurring the investigations that led to the US indictments in 2015 against individuals for their participation in corruption and fraud. These so-called whistleblowers had better access to information and were more dedicated to FIFA’s mission to foster the development and growth of the sport than any outsider would be, but they often came forward at great personal and professional sacrifice to themselves. Not only could a comprehensive program to incentivize insiders to come forward and protect them from retaliation begin to change the culture of corruption in FIFA, but it could also serve as a model for governance reform in international nonprofit organizations more generally.