7/8/2013. The Site Selection Process for International Athletic Competitions and the Struggle Against Corruption

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1 The Site Selection Process for International Athletic Competitions and the Struggle Against Corruption Presented by: Thomas Hamilton Lead Counsel of Amcom Software July 12,

2 Agenda Introduction Overview of the Competitive Bidding Process for Event Hosts Association Rules and Codes applicable to prospective host committees Anti-corruption laws and their impact Case Studies: 2002 Winter Olympic Games and the 2018/2022 World Cup Solicitation Process Conclusion 2 2

3 Introduction Why is there significant interest in hosting international athletic competitions? Prestige Civic pride-national and local Increased international interest in tourism Increased economic development???» Improved infrastructure» Facility development» The Olympic Legacy 3 3

4 The Competitive Bidding Process-Olympics Two years prior to the date of selection the prospective host city in conjunction with that country s National Olympic Committee submit an application and are then an Applicant City. Applicant Cities answer questionnaire covering how they will organize a successful Games. IOC investigates Applicant City on:» Is the city large enough to handle the Games?» Can the city raise enough funds to host the Games?» Does the city have a highly positive media exposure? If IOC feels they are a fit applicant they are promoted to a Candidate City Bid Committee pays IOC an application fee in excess of $150,000 Second questionnaire is also submitted which offers further detail IOC Evaluation Commission evaluates the proposed candidate» Include IOC members, representatives of international sport federations, national Olympic committees, athletes, the International Paralympic Committee and international experts» Make four-day inspection visits to each of the candidate cities to check proposed venue sites and details about the Candidate City s application 4 4

5 The Competitive Bidding Process-Olympics Continued IOC Evaluation Commission prepares a report and sent to all IOC members before the IOC General Session IOC General Session must be hosted in a city that did not submit an application to host the games Election is made by all assembled active IOC members Successive rounds of voting until one city receives an absolute majority Each subsequent round eliminates the Candidate City receiving the least amount of votes in the previous round Successful bid delegation signs the Host City Contract with the IOC and is the official delegation of duties to the host city and successful National Olympic Committee 5 5

6 Timeline for 2020 Olympic Games Selection Process » 16 May IOC sent letters inviting the National Olympic Committees (NOCs) to submit bids» July and August IOC asked for NOCs to submit letters regarding compliance with the World Anti-doping Agency code by 29 July. The IOC also requested submissions of proposed dates if countries want to stage the Games outside the normal period set by the IOC (15 July to 31 August). The IOC responded to NOCs on these points by the end of August.» 1 September Deadline to submit the names of cities interested in hosting the 2020 Summer Games» 2 September IOC confirmed that they had received six bids» 3 4 November IOC held an information seminar for 2020 applicants» 8 December IOC announced the drawing lots order of applicant cities» 15 February application files and guarantee letters submitted to the IOC» 23 May IOC executive board in Quebec City decided which cities were to be approved as official candidate cities» 27 July 12 August Olympic Games Observers Programme at the Games of the XXX Olympiad in London» November 2012 Olympic Games debrief in Rio de Janeiro» 7 January Candidature Files Submitted» 4 7 March IOC Evaluation Commission visited Tokyo, March IOC Evaluation Commission visited Madrid, March IOC Evaluation Commission visited Istanbul» 25 June Report of the IOC evaluation commission» 3 4 July Candidate cities briefing to IOC Members at Extraordinary session in Lausanne» 7 September Election of the host city at 125th IOC session in Buenos Aires 6

7 The Competitive Bidding Process-FIFA World Cup Two years prior to date of selection FIFA invites applications from all national football governing bodies Governing bodies have two weeks to submit intention to bid Six weeks after the deadline to register each interested governing body must submit a completed bid registration form Two months after the deadline of the registration form the governing body must submit the full details of their bid In the summer prior to the vote FIFA s executive committee performs on-site inspections of each applicant FIFA Executive Committee vote takes place approximately three months after the inspections are completed All eligible members of the FIFA Executive Committee have one vote» Currently 24 members, however in latest vote two were suspended due to accusations of selling votes Selected host nation must have absolute majority Country receiving fewest votes in each voting round is eliminated In case of a tie, FIFA President has the deciding vote 7 7

8 Association Rules and Codes of Ethics IOC Code of Ethics First adopted in 1999, recently revised in 2012 Extension of the Olympic Charter Lead by the IOC Ethics Commission Covers IOC Members, honorary members, international federations, National Olympic Committees, host city and host city applicants Includes rules concerning election of the IOC president, behavior of Olympic parties, conduct applicable to all organizing cities, and conduct for international federations and those international federations seeking inclusion to the games Interpreted under Swiss law Rules of Conduct Applicable to All Cities Wishing to Organise the Games Individual set or rules developed for a particular bid process In addition to standard rules applicable to host city applicants contained in the IOC Code of Ethics National Olympic Committees and Host Cities are covered and the National Olympic Committee is responsible for ensuring compliance by themselves and the host city FIFA Code of Ethics First adopted in 2004, recently revised in July 2012 Covers all officials and players as well as their agents (officials are any administrative official at all levels within the sport) Covers off-field conduct only Created FIFA Ethics Committee Includes Rules on forgery & falsification, conflicts of interest, gifts and other benefits, bribery and corruption, discrimination, protection of physical and mental integrity and integrity of matches and competitions 8 8

9 Anti-corruption-Corruption Perception Index 9 9

10 Anti-Corruption Laws 10 10

11 Foreign Corrupt Practice Act The Foreign Corrupt Practices Act of U.S.C. 78dd-1, et seq. Introduced by Wisconsin Senator William Proxmire Makes it unlawful for any issuer of securities to make use of the mail or an instrumentality of interstate commerce corruptly in furtherance of an offer payment, promise to pay, or authorization of the payment of any money or offer, gift, promise or to give, or authorization of giving of anything of value to a foreign official for the purposes of: Influencing any act or decision of such foreign official in his official capacity Inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official Securing an improper advantage Inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality In November 2012 the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission created A Resource Guide to the U.S. Foreign Corrupt Practices Act which provides guidance to compliance and internal monitoring practices 11 11

12 Who is Subject to the FCPA? 12 12

13 Penalties for FCPA Violations 13 13

14 FCPA Enforcement 14 14

15 United Kingdom Anti-Bribery Laws Bribery Act 2010 (2010 c. 23) UKBA Criminalizes: Giving Bribes Taking Bribes Failure to Prevent Bribes that are made on your behalf Taking Bribes Requesting, accepting or agreeing to receive / accept a bribe to improperly perform a function or activity Taking can occur directly or by means of third party Can be by acquiescence passive acceptance 15 15

16 United Kingdom Anti-Bribery Laws Prohibitions UKBA prohibits individuals and commercial organizations from giving bribes to private sector and public sector individuals and organizations UKBA also separately penalizes failure by commercial organizations to prevent bribes that are made on their behalf by associated persons, i.e., third parties UKBA applies extra scrutiny when bribes are made to public sector officials Bribery of foreign public officials includes legislative, administrative, or judicial positions Bribery of officials or agents of public international organizations Bribery of foreign public officials occurs when bribes are directly or indirectly made or promised: To obtain or retain business or To obtain an advantage in the conduct of business when such advantage is not legitimately due 16 16

17 Reach of the United Kingdom Anti-Bribery Laws UKBA not limited to bribes of foreign government officials Activities to which a bribe relates: Any function (department, section, company) of a public nature Any function of a private nature Any activity (such as sales) connected with a business, trade or profession Any activity performed in the course of a person s employment Any activity performed by or on behalf of a company or business UKBA NOT limited to activities performed in UK Activities addressed in UKBA encompass: Activities performed within the UK Activities performed outside of the UK Activities with no connection to the UK 17 17

18 Significance of the United Kingdom Anti- Bribery Laws Non-UK companies that carry on business in UK are potentially captured by UKBA jurisdiction UK courts will decide what it means to carry on business presence in UK A UKBA violation is committed even if no elements are committed in UK A UKBA offense can occur anywhere in the world where an associated person makes a bribe on behalf of a relevant commercial organization Non-UK companies should not plan to rely on very technical arguments that they are outside the jurisdiction of the UKBA SFO 2012 Payments to foreign officials thru third parties is a violation of law 18 18

19 United Kingdom Anti-Bribery Act Guidance SFO guidance on hospitality, and entertainment must be reasonable However, no such cases have been decided and SFO emphasizes that while corporate hospitality and entertainment is an important part of business, bribes may be disguised as legitimate hospitality FCPA allowed facilitating payments made for routine governmental acts or administrative functions, such as when a payment is requested to obtain a business license, to move to the head of the line to receive their license. UKBA - there is no defense for facilitation payments being considered bona fide business expenses. Therefore, facilitation payments are bribes under the UKBA. Company stance is to make NO facilitating payments

20 2002 Salt Lake City Winter Olympic Games Over $16 Million dollars spent on Salt Lake City s Bid 70 of the 100 IOC Members personally visited Salt Lake City at the Bid Committee s Expense Under the listed purpose of viewing potential venues for the game Employment Opportunities created for IOC Family Members at First Security Bank Assistance to entrance into the University of Utah Medical Treatment of IOC members at Intermountain Health Care 20 20

21 Investigations into the Shenanigans in Salt Lake City Initiated by Swiss IOC member Marc Holder, head of the IOC s coordination committee announcing that several members of the IOC received bribes from the Salt Lake City Organizing Committee Investigations by IOC, USOC, SLOC and US DOJ IOC Investigation results Ten IOC members were expelled and another ten were sanctioned Adopted stricter rules for future bids and imposed gift receipt ceilings for IOC members Created term and age limits for IOC members United States Department of Justice Investigation Resulted in United States v. Welch, 327 F.3d 1081 (10 th Cir. 2003)» Fifteen Charges of bribery and fraud under the Travel Act, mail fraud and wire fraud made against the heads of the organizing committee- Tom Welch and David Johnson» Both were acquitted of all criminal charges 21 21

22 2018 and 2022 World Cup First Time in FIFA history 2 World Cups were awarded at the same time Ended Continental Rotation Policy FIFA Rule that no confederation can host a World Cup if it a nation within it hosted one of the previous two complicated matters 2018 bid candidates were Belgium and the Netherlands, England, Portugal and Spain, and Russia 2022 bid was between Australia, Japan, Qatar, South Korea, and the United States 2018 was awarded to Russia and 2022 was awarded to Qatar 22 22

23 2018 and 2022 World Cup Selection Controversy Claims that two members of FIFA executed committee in exchange for support of countries biding to host the 2018 and 2022 World Cups Reynald Temarii, a French FIFA Vice President Amos Adamu, a Nigerian Member and President of West Africa Football Union Allegedly said they would guarantee a vote for the US bid for $800,000 Amos Adamu claimed money would be used to pay for Four Nigerian Football Stadium England bid chief claims that Four FIFA committee members asked for various things in exchange for votes FIFA Vice President Jack Warner is claimed to ask for 2.5 million for various projects FIFA member Nicolas Leoz request to be knighted Two committee members, Issa Hayatou and Jacques Anouma are claimed to have received $1.5 million in exchange for votes for Qatar 23 23

24 FIFA Reaction to claims of claims of impropriety in selection of 2018 and 2022 World Cups In May 2011 FIFA President Sepp Blatter rejected all evidence that any corruption had occurred after a 2 week review However, FIFA Vice President Jack Warner was suspended for a separate ethics violation on the same day» In reaction to his suspension Jack Warner leaked an from FIFA General Secretary Jerome Valcke that suggested Qatar bought the rights to the 2022 World Cup Odd dismissal given that in February 2011 FIFA admitted that Spain and Qatar traded votes for bid» No action taken because President Sepp Blatter said it didn t work because Spain was not awarded 2018 World Cup In July 2011 FIFA released an it received from the whistleblower claiming that the claims of corruption were false and were out of revenge on the Qatari bid committee» Doubts still exist, particularly amongst United States and England bid committees 24 24

25 Conclusion Given the prestige and money involved in hosting international athletic competitions potential for corruption will always exist and organizing committees will always look for competitive edge How can we limit potential for corruption? Strengthening and broadening of FCPA United Kingdom Bribery Act 2010 is a start towards more effective management of corruption due to its increased reach Global problem so a global solution is needed, individual country anticorruption laws of varying strength are proving insufficient and impacts organizing committees in different countries in a varying manner International Convention on anti-corruption and global adoption of anticorruption policies will be the most effective solution 25 25