New report: Conflicting Interests and the 2010 FIFA World Cup
Cape Town Stadium under construction in September 2009. Photo: Local Organising Committee, MediaClubSouthAfrica.com
11.05.2010By Katja Høiriis
Eight different journalists and researchers contribute to the report through six detailed case studies, which highlight how the dynamics particular to mega-events can generate ethical conundrums and complexities that confront current and future policy makers and host nations.
Catalyst for competition
South Africa is host to this year’s FIFA World Cup, which is the biggest media event in the world. Its magnitude warrants the title of mega-event, which are associated with large-scale economic impacts on the host country. South Africa expects to gain a lot from the competition, both in economically and this socially, as visitors will come and spend their money, but also image-wise as all eyes turn to South Africa.
The business opportunities that stem from the world’s biggest sporting event are plentiful. The infrastructure projects generate lucrative construction and tendering contracts, which are often financed by host nations and their governments.
The FIFA World Cup is thus a catalyst for competition – not only among football stars, but also among the many private and public contenders for the multiple tenders that flow from these highly financed events. There is ample opportunity for corrupt individuals to influence outcomes through bribes, fraud and extortion, thereby increasing the risk of conflicts of interest and, ultimately, corruption.
Conflicts of interest situations
According to the report, three factors make large construction projects vulnerable to corruption.
Firstly, the sheer financial magnitude of public funded infrastructure projects, such as we see in South Africa up to the World Cup, makes the concealment of corruption much easier. It is difficult to get an overview of the spending and changing market costs makes prices difficult to compare. This means that bribes and inflated claims and costs are easier to hide in these large- scale projects.
Secondly, time is often limited in construction related to mega-events such as the World Cup, where the host nations must ensure that stadia and infrastructure can live up to FIFA’s standards within a relatively short time limit. This creates the opportunity for officials to argue that they cannot afford to look around and thus award contracts to companies they ‘know’ and ‘trust’.
Thirdly, the nature of the construction industry is notoriously corrupt, according to Transparency International. The use of sub-contractors, sub-sub-contractors and different suppliers makes oversight very difficult and facilitates corruption, bribery, extortion and fraud.
Conflicts of interest with regards to mega-events can also happen when the different actors have contesting interests. The corporate interests of FIFA and the public interests of the host nation might not always align perfectly. A situation may arise, where FIFA is in a powerful position to advocate its own interests and get officials from the host nation to change its policies even if it conflicts with the public interest.
Does the end justify the means?
‘Why should these varied and seemingly unrelated observations about the 2010 World Cup concern us?’ the report then asks.
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?
However, the costs of corruption are high, argues the report. 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 projects, or environmentally and 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.
The six case studies
These are some of the ethical governance challenges that are explored in the report. It does not aim to present a set of proposals for reform or a set of ‘best practice’ recommendations. Instead, the objective is to provide readers with an accessible, stimulating and exploratory documentation of some of the more controversial aspects of the 2010 World Cup.
Chapter 2: Soccer City: What it says about the murky world of government tenders
Here, Rob Rose explores tendering irregularities surrounding the contracts for Soccer City in Johannesburg. He presents evidence on how the City of Johannesburg ceded the profits it will earn from the World Cup to a little-known company called National Stadium SA (NSSA) and other disturbing aspects of the contract. The chapter, furthermore, looks at South Africa’s opaque tender system which, according to Rose, provides fertile ground for serious conflicts of interests to fester.
Chapter 3: Tendering irregularities in the Eastern Cape
Here, Eddie Botha and Gcina Ntsaluba examine tendering irregularities in the Eastern Cape. Their material looks at irregularities in the allocation of advertising contracts by the Eastern Cape Tourism Board, the suspension of a whistle-blower, accusations of favouritism, and controversy and allegations of bribery surrounding the construction of the Mthatha’s Stadium.
Chapter 4: How FIFA corruption empowers global capital
Here, Andrew Jennings provides information on the global nature of corruption within FIFA, where the absence of transparency and accountability within the organisation is presented by Jennings as a cultivator of unrestrained nepotism and favouritism. Furthermore, Jennings also discusses the disproportionate power and leverage FIFA holds over the host nations and governments, manipulating deals and profits in their favour without scrutiny.
Chapter 5: FIFA’s ‘official’ suppliers: Shadowy tenders and conflicts of interest at Match
Here, Rob Rose documents potential conflicts of interest with regards to the way FIFA awards its very lucrative contracts for the World Cup. Like Andrew Jennings, Rob Rose also raises questions about the lack of transparency of FIFA’s contracts, showing how FIFA rewards multi-million dollar contracts without any tender process.
Chapter 6: Public loss, FIFA’s gain: How Cape Town got its ‘white elephant’
Here, Karen Schoonbee and Stefaans Brümmer explore how Cape Town came to build a new stadium even though a FIFA committee found that it had other suitable options. They examine the decision making process that lead to the outcome and conclude that, instead of the government remaining a neutral arbiter between the public interest and FIFA’s interest, in the end, FIFA’s interests effectively became those of the government.
Chapter 7: Durban’s Moses Mabhida Stadium: Arch of hope or yoke of debt?
Here, Sam Sole continues the public interest theme and questions whether the Moses Mabhida stadium is an arch of hope or a yoke of debt. Sole argues that the ones who benefit from the stadium are big construction companies and the local political elite, while the high costs disproportionately affect the poorest citizens of the city.
Conflict between public and private interests is recognised as one of the most prevalent challenges at all levels of public life in South Africa. Mega-events, like the 2010 World Cup, provide fertile ground for conflict of interest situations to manifest.
While the chapters of the report each tell their own compelling stories, each case study speaks to a set of common issues. These, in turn, allow for several conclusions and policy recommendations to be drawn from the analyses.
The report, thus, concludes with reflections on some of the most important themes in the report, such as the general lack of transparency and accountability in these mega-events. It, furthermore, reflects on the link between mega-events and public interest and questions the role and responsibilities of the host governments. Finally, it reflects on the South African context and provides broad recommendations to a range of actors interested in strengthening the governance of mega-events.
Visit the Institute for Security Studies’ website and download the different chapters of the report here: http://www.iss.co.za/pgcontent.php?UID=29940
See the entire report as a pdf here: http://www.iss.co.za/uploads/Mono169.pdf