Corruption: Different sectors, similar challenge

Money is a magnet for corruption. In both the world of development and the world of sport, the sums changing hands are considerable. The World Bank currently oversees around $200 billion in development loans. The international sport economy is estimated to be as large as $500 billion.


At first glance, the world of sport and the World Bank might seem to have little in common. The World Bank is a multilateral development institution working to eliminate poverty. The International Center for Sport Security is a nonprofit body that promotes safety and integrity in sport. But for the last three years, we, as the vice president of Integrity at the World Bank and the founder of the International Center for Sport Security, have found common ground in the fight against corruption.

Although we operate in different sectors, the threats and vulnerabilities our organizations face are similar — as are the solutions.

In countries around the world, the World Bank, along with members of the international sport community, often operate in environments that are frustratingly permissive to corruption and financial impropriety.

Both the World Bank and international sports federations (in the organization of major events) are heavily involved in infrastructure development. These large-scale construction projects — highways or stadiums, for example — are prime targets for corruption and money laundering schemes. As costs are inflated to pay for these illegal activities, public trust plummets in institutions that are responsible for a community’s social and economic development.

At the moment, illicit financial flows have a significant impact on aid and foreign direct investment, and, in some under-regulated markets, on securing the integrity of financial transactions and ensuring funds go toward their intended purpose.

Under the shadow of organized crime, a complex network of shell companies and offshore accounts mask exactly who owns what. Similarly, in the world of sport, player contracts and transfers have increasingly become favored vehicles for illicit activities such as money laundering and tax evasion. A player who is forced to give up his or her image and licensing rights also has no say in how those profits are used. A lack of consistent, firm regulation has also affected transparency in sport club ownership, where increasingly opaque structures are vulnerable to criminal infiltration.

Sport teaches us meritocracy and fair play, values that should permeate throughout our politics and economics. Unfortunately, the level playing field we so often refer to, whether in sport or in bidding on large infrastructure projects, continues to remain an aspiration in both sport and business.

That’s why the World Bank and the ICSS are taking action. In both of our sectors, clear, effective regulations that are harmonized across stakeholders, supported by strong political will with the power of enforcement behind them, can do much to stop corruption.

The World Bank investigates and blacklists firms that engage in fraud or corruption related to the projects it funds. By brokering a cross-debarment accord in 2010, the World Bank has multiplied the impact of its sanctions. Currently, 670 entities have been blacklisted by the five major development banks, and the publicly available list serves as a due diligence tool for governments and private sector firms.

And at a recent U.S. Senate subcommittee hearing on governance and integrity of international soccer, ICSS advisory board member Michael Hershman announced the launch of the Sports Industry Transparency Initiative to counter corruption and financial impropriety in sport by developing a series of international standards for all stakeholders: federations, leagues and teams alike.

Corruption is too pervasive, and too entrenched, to be tackled by the World Bank and the ICSS alone. We are, therefore, jointly calling for a stronger, cohesive response from governments, law enforcement agencies, private sector firms and civil society to end this failure to exercise accountability. Corruption thrives when those in power allow it to thrive.

Money from the World Bank builds roads, bridges and schools. It helps fund the physical infrastructure that so many countries desperately need. Sport builds up a different kind of infrastructure — one of culture, character and pride — that has proven invaluable to so many across the economic spectrum. Infrastructure, in all its forms, is the foundation for society, one that we need to vigorously protect from the crumbling effect of corruption.

McCarthy is vice president for Integrity at the World Bank Group. Hanzab is founder and president of the International Center for Sport Security.

The Hill

21 July 2015