Rumors of corruption have swirled around the international football organization FIFA for nearly two decades. So it came as little surprise in 2015 when the U.S. Department of Justice finally swooped in and began making arrests. What was surprising was how deep the bribery allegations ran, how high prosecutors were reaching into FIFA's administration and how broadly they were looking into the organization's deals with other businesses.
As of this writing, at least 47 individuals and two corporations have been charged, including six businessmen and one banker, with more than a dozen convicted. Many of the charged were vice presidents and other high-ranking officials of the ruling body of global football (or soccer in the U.S.), formally known as the Fédération Internationale de Football Association.
Racked by scandal, Zurich-based FIFA was forced to clean house if it wanted to survive. As its new president, Gianni Infantino, explained in a governance report published in May: "The gravity of the crisis that assailed FIFA in recent years called for equally radical measures."
So the world's largest sports organization with members in 211 countries underwent a massive restructuring. Besides the new president, the changes brought a new secretary general, a new ruling council and a promise of good governance. The next key step was to hire Edward Hanover as FIFA's first-ever chief compliance officer. Upon joining FIFA in October 2016, Hanover quickly set up the group's first compliance division and began implementing wide-ranging reforms.
In this exclusive interview with Corporate Counsel, Hanover spoke for the first time publicly about his job. He discussed what's it like to enter a large organization amid such change and "actually build the compliance function from scratch." And he outlined each step he took to try to meet FIFA's and Infantino's new policy of "zero tolerance for wrongdoing."
Breaking From the Past
Hanover insists his job is to look to the future, not the past. He says his focus is on compliance, while FIFA's legal department deals with the investigations being conducted by U.S. and Swiss authorities, as well as by individual nations into their own FIFA chapters. But an understanding of the past corruption is necessary to comprehend the scope of the work cut out for Hanover.
The first shock to the organization that sponsors the World Cup came on May 27, 2015, when Swiss police, on U.S. orders, arrested seven FIFA executives in Zurich on various corruption charges. Sepp Blatter, FIFA's entrenched president of 17 years, criticized the United States and called the arrests politically motivated.
FIFA legal director Marco Villiger immediately phoned counsel at Quinn Emanuel Urquhart & Sullivan for help. The law firm advised FIFA, according to the Financial Times, to cooperate fully with investigators and to paint itself as a victim of the crimes.
On May 29, an embattled Blatter was re-elected, but abruptly quit the presidency three days later. Key sponsors, including The Coca-Cola Co., McDonald's, Anheuser-Busch InBev and Visa had called for Blatter's removal, according to news reports. He continues to be a target of the investigation.
Arrests related to the scandal continued into 2017. In June, the first banker was convicted of conspiracy to launder money from FIFA-related bribes. Jorge Luis Arzuaga, ex-director at the Swiss bank Julius Baer, pleaded guilty to the charge. Then in July, Spanish police in Madrid arrested Ángel María Villar, the president of the Spanish soccer federation and a senior vice president of FIFA. Villar was accused of using football games to financially benefit his son, sports lawyer Gorka Villar, who was also arrested along with three other Spanish federation executives. The federation declined comment, and the Villars could not be reached.
The FIFA investigation is expected to continue for two to three more years.
First Steps for Reform
FIFA began to remake itself in February 2016. That's when an extraordinary meeting of the FIFA Congress elected Infantino as the new president. A majority also voted to approve statutory reforms that allowed the organization to restructure its leadership and adopt best practices in governance. Fatma Samoura, who became the first woman secretary general in May of that year, called it "a watershed moment."
The new statutes split the power at the top into two executive roles. One part is the president, who chairs a newly created group of 36 members called the FIFA Council, to set overall strategic direction and generally supervise the administration. The other is the secretary general, who serves as a CEO, overseeing operations and commercial transactions. The vote also created Hanover's position of chief compliance officer within a compliance division. He reports both to the secretary general and to an independent Audit and Compliance Committee. The compliance chief has "unrestricted authority and the right to access, inspect, review and investigate any organizational unit of FIFA," the organization said.
FIFA also adopted a myriad of other best practices. Among them were term limits on officers and council members; a requirement that committees be independent, including the ethics committee and a new human rights committee; an eligibility check for the president and all members; an increase of women members on the council to six (a former executive committee allotted one seat to a female); and transparency in compensation.
Last October, Infantino announced his vision for the future. His plan included promoting football through more funding to the regional chapters that sign contracts allocating how the organization's money will be spent, and to verify the spending. The plan also calls for more diversity, such as doubling the number of women players to 60 million by 2026.
Around the same time last October, U.S.-born Hanover started his new job. Hanover—truly an international lawyer—most recently worked as head of compliance for emerging markets at Takeda Pharmaceuticals in Singapore. Prior to that, he served as region general counsel and senior director for legal and compliance at the Danish pharma company Novo Nordisk, in Denmark and then in Zurich.
"All that international experience really helped me in FIFA," he says. "While FIFA seems like a small organization from a personnel standpoint, it is a massively large machine, where every culture and every language is on tap every day."
Let There Be Compliance
Hanover calls the FIFA reform statutes his roadmap. "They set the milestones and the direction, but left it up to the divisions to figure out how to get there," he says. He studied the statutes, "and the pathways where reforms occur, and how my team would have touch points with those components."
One example is Infantino's plan to distribute more revenues to member associations. The idea is to promote soccer in every country, with contracts to hold the memberships accountable for how money is spent. Hanover says he's excited to be part of such a vision, but the complexity of expanding around the world using local contractors creates serious compliance challenges.
"Under new regulations, they [local chapters] need a segregated bank account for any FIFA funds," he explains. "If funds are misused, the audit and compliance committee can go in and say: 'Return the money.'"
But before Hanover could tackle these challenges, he had to set up his department. To get started, he met with the heads of each FIFA division including development, competitions, football administration, finance, business, personnel, services and communications. Hanover asked about divisions' agendas for the year, in order to guide him in better allocating his resources and building his compliance program.
He completed an assessment to pinpoint key compliance risks. "The risks are what most multinational organizations face, such as interacting with a large number of third parties; due diligence; making sure FIFA has appropriate policies and training platforms in place," he says. He then did a needs assessment for FIFA and his division. He made an organization chart, determined the jobs and the job descriptions, and took it all to the secretary general. "She was extremely supportive," he says. "I got everything I asked for." This amounted to three other lawyers, four auditors plus his executive assistant. He declined to discuss his budget, but calls it "large." At any given time, he says, he has four to six law firms supporting his division. Among those firms, he uses the London office of Reed Smith to work on export controls, sanctions advice and program components; and the Houston-based R. McConnell Group for code of conduct review.
At all times, he juggles long-term goals with current pressing issues. His first two hires, for example, focused on the Confederations Cup event in Russia held in late June and early July. He hired another lawyer to head a compliance strategy and operations group to create compliance toolkits for all of FIFA and work on a revised code of conduct. That lawyer, Vincent Denonville, came to FIFA from a Japanese bank with its European headquarters in Brussels. "I wanted a senior compliance professional who has worked in international environments but from a different regulated industry than me," Hanover says.
Hanover heads a team that supports tournament events, sponsorship agreements, TV rights and any revenue stream that comes into FIFA. Another team provides advice to memberships, especially on funds they receive from FIFA. An independent internal audit team, also reports to Hanover.
Early in the year Hanover says he held a town hall to "show the staff what the compliance program would look like in 2017." In April, he held a code of conduct workshop with external consultants to review the existing code and solicit ideas for changes. The revision is nearly done. He says communications, policies and procedures, and training are how he focuses on embedding the compliance culture globally.
And, of course, "We also get to watch football," Hanover adds. "We always have tournaments and events going on. And we took some of the management team to St. Petersburg [Russia] for the Confederations Cup final with Germany playing Chile." For whom did he root? Ever the diplomat, Hanover replies, "I was rooting for a good match, and it did not disappoint." (Germany won, 1 to 0.)
Sue Reisinger can be contacted at email@example.com.