FIFA Scandal: The Latest News and Updates

The Fédération Internationale de Football Association (FIFA) is a public corporation that was founded in Paris in the year 1904. The association is based in Zurich and is composed of 211 member associations. The goal of the corporation is to improve football as enshrined in its Statutes constantly. The organization has various achievements and has evolved to reflect its global mission over a long period. The development has been enhanced by the role that football plays throughout the globe, about bringing people together, exciting them, and changing their lives for the better. The corporation has a mission of touching the world through the inspiring tournaments, developing football all over the globe and for everyone, and building a better future through the power of the game. FIFA recently underwent an accounting scandal that bases its causes on corruption in the corporation. 

FIFA is a large corporation that is responsible for running the world’s football. The organization organizes referee coaching courses with the aim of developing football. The organization also stages the world’s largest single sports event, that is, the FIFA World Cup. This enables people from different parts of the globe to come together hence touching the world. FIFA also helps to build a better future for the globe by its various social development initiatives. The corporation has various sponsors including McDonald’s and Coca-Cola companies. 

In the year 2011, FIFA was accused of a disloyal payment made to Mr. Platini. They were found guilty of various breaches of around USD 2 million (£1.3m). Justice Department indictment had it that FIFA officials solicited and received over USD 150 million in bribes in exchange for their official support. The support included but was not limited to influencing broadcast rights, the awards of marketing, and contracts of sponsorship (Masters, 2015). In one instance, the organization allegedly sold votes to award the World Cup festival held in South Africa in the year 2010. The internal controls of the organization governed payments that require authorization and the levels of executive needed. Payments made to executive’s personal accounts that are not payroll transactions were prevented by strict controls. Some of these kinds of transactions were made through FIFA headquarters and money was sent by FIFA bank accounts to United States banks (Brooks, Aleem & Button, 2013). 

FIFA made a financial disclosures that gave a reflection of the high costs that the accounting scandal of world soccer’s governance has had over time. For a period of 13 years, FIFA has been earning lots of returns. Thereafter, FIFA made a huge loss of USD 112million in the year 2015. This was majorly as a result of the time and money spent to solve the continuous cases of corruption in the US and the criminal inquires in Switzerland. The services offered by the lawyers and consultants from different parts of the globe cost FIFA a lot of expenses that rose to about USD 2 billion spent on legal fees. The year 2015 is referred to as the year that posed a lot of challenges to the world’s football governance. Predictions indicate that there may be further difficulties in the future global football and for new reforms to become effectives, it will take quite some time. However, FIFA aims to establish a professional, fully accountable, and a trusted sports organization come 2018 FIFA World Cup that will be held in Russia. FIFA is characterized as a victim of corruption of its former leaders. FIFA underwent huge financial damages that are estimated to tens of millions of dollars. 

However, the organization is not hurting so much from the accounting scandals they faced. More than USD 3million revenue was recorded by FIFA in the year 2014. World Cup is the main source of FIFA’s revenue. In 2014, Brazil-hosted World Cup that cost the country an estimated amount USD 4 billion. However, the tournament earned FIFA revenue of approximately USD 2billion through sales of broadcasting rights, sponsorships, and merchandising. The organization is financially independent and has USD 1.34 billion in cash that is kept to react to unexpected events such as the accounting scandal of 2015. 

There were various outcomes of these accounting scandals that FIFA encountered. The organization held a presidential election in February 2016 to replace its president; Mr. Blatter. The UEFA also held elections of its new head. Suspensions were given to Mr. Platini and Mr. Blatter, and they no longer run the organization. FIFA continued to be run by its vice president Issa Hayatou until 2016 after elections. Angel Villar Llona, head of Spain’s football association, and vice president of USFA, also continued to run USFA (Giese, 2016). 

FIFA’s accounting scandal was greatly attributed to corruption in the organization. The officials involved in the corruption took part in various illegal issues concerning money transactions during World Cup events, particularly the year 2010 in South Africa. 

Financial analysis

links to the financial statements

http://www.fifa.com/mm/document/affederation/administration/02/56/80/39/fr2014weben_neutral.pdf 

http://resources.fifa.com/mm/document/affederation/administration/02/77/08/71/gb15_fifa_web_en_neutral.pdf

References

Brooks, G., Aleem, A., & Button, M. (2013). Fraud and Corruption in Football. In Fraud, Corruption and Sport (pp. 73-88). Palgrave Macmillan UK.

Giese, S. (2016). Implications for Corporate Sponsors Arising from Scandals in Sport. The Case of Adidas and FIFA (Doctoral dissertation, Universidade Católica Portuguesa).

Masters, A. (2015). Corruption in sport: From the playing field to the field of policy. Policy and Society , 34 (2), 111-123.