By Mitchel Gagnon ’24 Associate
Corruption is a concept that has been a part of society for millennia. Its impact on people can be measured on a variety of scales, but economically and financially is where the impact is felt most. As of 2018, the annual cost of international corruption is roughly $3.6T, mainly in the form of bribes or stolen money. This is widely concerning for investors; how are they to know if the money they provide is going toward a business or someone’s back pocket? A 2017 survey from Transparency International found that 36% of elected officials were ranked as “corrupt”. FIFA, the world’s governing body for fútbol (or soccer), faced their largest ever corruption scandal in May of 2015, with some $200B being embezzled into the organization by the Qatari government to ensure they received the right to host the 2022 FIFA World Cup. Investments in companies usually come from individuals or companies, and in FIFA’s case, some of the investments they receive are coming from countries, making the credibility and integrity of the organization and the use of their funds that much more crucial.
The corruption of FIFA started back some two decades ago, with bribes being made by countries and individuals alike in order to ensure power in the organization. In 2015, the United States Department of Justice released a 164 page criminal indictment charging seven FIFA executives of corruption, collecting roughly $150M over two decades. The fallout of this discovery resulted in multiple arrests, dozens of resignations, and a dark cloud looming over the world’s favorite sport. An investor might ask, why invest millions into a corporation that is accepting money under the table for personal gain? As a nonprofit organization, FIFA’s mission is to help support and develop the game of fútbol through donations and partnerships with large companies and donors. The main sponsors and supporters of FIFA include but are not limited to; Coca-Cola, McDonalds, Visa, and Budweiser, global companies that contribute hundreds of million dollars to the organization’s development. With the image of corruption looming over their head, FIFA now stands in a position where they could lose billions because of lost sponsorships. The ending question FIFA faced and continues to face is: How do we win back the trust and support of not only fans, but investors as well?
The potential answer to avoiding future scandals and controversies, not just for FIFA, but for corporations in general, is to appoint officials who have the integrity to keep the organization’s vision and mission at heart. In order to attract investors, founders must hold a level of integrity that shows dedication to their passion and mission. Otherwise, what is stopping a founding team from making the same mistakes made by FIFA, and creating a global empire built upon the false image of integrity and passion. As start-ups take time to develop and see their ultimate goal, FIFA must now take time to rebuild their image, integrity, and message in order to win back the favor of the hands feeding the world’s favorite sport.
Mitchel is a junior from Manchester, New Hampshire studying Finance and Marketing. This is his first semester in the fund, and he is excited to learn alongside his peers about private equity and investing. This past summer he worked as an intern for Cross Insurance in Manchester, New Hampshire, where he explored and expanded his knowledge in the realm of finance. On campus, he is also actively involved in UNH’s professional business fraternity, Alpha Kappa Psi.