Keeping the Game Clean: Conflicts of Interests and the FIFA 2010 World Cup(TM)
In a few days South Africa will host the FIFA World Cup. For many it is a welcome sporting event. It is also anticipated to be something of an economic phenomenon for the country, promoting economic growth and employment, and stimulating much-needed urban and infrastructural development. Yet, mega-events also provide fertile ground for conflict of interest situations to manifest.
Collette Schulz Herzenberg, Senior Researcher: Corruption and Governance Programme, ISS Cape Town.
In a few days South Africa will host the FIFA World Cup. For many it is a welcome sporting event. It is also anticipated to be something of an economic phenomenon for the country, promoting economic growth and employment, and stimulating much-needed urban and infrastructural development. Yet, mega-events also provide fertile ground for conflict of interest situations to manifest.
The business opportunities that stem from the world’s largest sporting event are plentiful. The FIFA World Cup is a catalyst for competition – not only among football stars, but also among the many private and public contenders for the lucrative government-funded construction and tendering contracts. There are plenty of opportunities for corrupt individuals to influence outcomes through bribes, fraud and extortion - increasing the risk of conflicts of interest and - ultimately, corruption.
The magnitude and uniqueness of the event, the nature of the construction industry, the vast sums of money involved, weak internal institutional oversight and accountability, opaque decision-making and the dearth of publicly available information all contribute to an environment conducive to conflicts of interest and corruption.
Consider the sheer financial magnitude and scope of this public-funded infrastructure project. Government’s total contributions to stadia related infrastructure stands at approximately R30 billion. Then there are the tight time parameters. Accomplishing the job on time is key. And as time becomes a disproportionate measure of performance, it creates opportunities for corrupt officials and business people to argue that we cannot afford the ‘luxury’ of oversight. We also need to reflect on the reputation of the construction industry, which is notoriously corrupt. Transparency International’s 2002 Bride Payers Index identified construction sector as the most corrupt worldwide, before the arms industry.
Once-off events are also notorious for weak oversight and accountability, opaque decision-making and little public participation or publically available information. In addition, almost all South African government departments and levels of government are involved in the organisation of event in one or another way. Political oversight of public spending is thus spread across multiple government institutions and at multiple levels of government.
Also consider the contesting interests of the different actors involved. For instance, the corporate interests of the organisers, FIFA and the ‘public interest’ of a host nation might generate conflicts of interest. Such a situation may arise when FIFA, which profits from the mega-event, is in a powerful position to advocate for decisions that maximise its own marketing and profitability. Yet, if the outcomes are detrimental to the project’s financial sustainability and the host country’s developmental legacy, it inherently conflicts with the public interest. In this instance FIFA is both player and referee – being heavily involved in the direction of the host nations development legacy but also set to make significant profits from the same decisions.
Since South Africa won the bid to host the World Cup in 2006, debates have raged about the benefits to the wider public body over a number of developmental, social, labour-related and economic issues. One such issue relates to the choice of newly built stadia where questions have been arise about the accessibility and long-term benefits to the wider community. As the story of Cape Town’s Green Point stadium aptly illustrates, although the FIFA inspection committee found that the city had other suitable options, there are suggestions that FIFA’s pressure on government for the choice of Green Point meant that the least desirable and most expensive option was chosen.
Thus, the public interest dimension raises new avenues for conflicts of interests in the context of a mega event.
The South African experience is yet to be fully written. Once our global visitors depart, however, in the months that follow, South Africans will inevitably engage in a critical review the event’s impact on a range of issues such as national pride and nation-building; the developmental legacy; and the future sustainability of the various stadia.
Yet, the experience has already highlighted critical governance-related issues. The first is that, no matter how much democracy resides at home, mega-events are inherently non-democratic. Mega-events are globally recognised as occasions that typically violate good governance practices, undermining transparency and participation in political and administrative decision-making. Certainly, civil society does not have the same say in this arena of public life as it does in others. The Scandinavians, recognising the governance defects, have coined a term ‘democracy deficit’ in an attempt to describe the lack of transparency and popular involvement in mega-project decision-making.
The lack of transparency in the construction industry compounds the problem. The nature of the contractual agreements between the South African government and the corporate sector are largely undisclosed, with little public participation or access to information. Costs are kept secret, even when public money is spent. Commercial confidentiality currently seems to take precedence over public interest. Therefore, publication of financial information and routine inspection of books and records do not normally take place. Moreover, public access to information on government tenders and government budgetary allocations and spending are particularly challenging.
In addition, the lines of accountability are blurred across multiple actors and institutions at different levels of government, making it difficult to identify to whom the various actors are accountable. An inevitable consequence of winning the right to host a mega-event is considerable pressure on government to deliver the required stadia, infrastructure and other facilities. Given the enormity of this undertaking as well as vast budgets and tight deadlines, it is likely that the usual monitoring and accountability mechanisms and procedures within government for conflicts of interest are strained, inadequate or simply non-existent. And without the necessary checks and balances in the public and private sectors, conflicts of interest and ensuing corruption may go undetected.
Why should these varied and seemingly unrelated observations about the 2010 World Cup concern us? If mega-events make governments expedite the spending of public funds efficiently and advance much-needed infrastructural projects and other important social services, surely they act as catalysts for economic and social development? If the means can justify the end perhaps it is acceptable to side-step democratic governance and accountability. It may even be tolerable to overlook conflict of interest situations and isolated instances of corruption to ensure the public have ready access to enhanced infrastructure and the country to an enhanced international image. However, the costs of corruption are high. Apart from eroding public trust and a country’s global reputation, it can result in more expensive financing and capital and maintenance costs, the misappropriation of funds, or inappropriate financing, unviable and defective or environmentally or socially destructive projects.
Preventing corruption in the procurement of these contracts and throughout the duration of the projects can save millions in inappropriately diverted, potentially squandered or looted public funds and help ensure the best quality infrastructure for poor and vulnerable communities in host countries.
Similarly, the ‘public interest’ tensions raised here are important but perhaps too elusive. Can we ever accurately judge whether different spending decisions or stadia location outcomes would better serve the public interest? Yet, as slippery as they appear, the public interest issues encourage us to explore deeper, more fundamental questions around the 2010 World Cup and mega-events generally. Which public values does FIFA espouse and which private interests does the organisation serve? Do public interest values suitably guide government’s decisions on the 2010 World Cup? And, ultimately, whose interests are really being served?
