Corruption Scandal Affects Organizational Culture

Unethical
Behavior

Introduction
• Every organization has its code of conduct which defines ethics to be followed for the smooth
running of the organization. Ethics is defined as doing what is right, even when no one is
looking.
• Seniors level managers have responsibility of all the players in the organization to ensure
every player is following ethical and truthful behavior to audience and viewers.
• Unethical behavior means actions that do not comply with the right standard to run a
business. In FIFA corruption scandal, the practice was unethical, former officials accept
bribes to give broadcasting rights and event hosting.
• The practice of accepting bribes by the top officials is obviously not at all acceptable as per
FIFA`s code of ethics. Corruption scandal affects organizational culture, the legal framework
of a country and external environment, individual morale and also the reputation of FIFA.
• FIFA officials demanded bribe to give the authority of broadcasting rights and hosting to
countries who bribed the officials to conduct.
• The corrupt institutional design of FIFA expanded because of lack of punishment and
incentives for member countries to engage them just by using the fame for economic gain
without contributing anything to society and people.

FIFA
• The FIFA (Federation Internationale de Football Association) was coined on May, 1904, headquartered in
Zurich. The countries which founded FIFA were- France, Denmark, Sweden, Switzerland, Netherland,
Belgium and Spain. Currently FIFA has 211 members.
• It is responsible for managing and organizing the football tournaments like Football world cup, FIFA
confederation cup. It is known to be the most enthusiastic international sporting event in the world (FIFA,
2018).
• It also appoints referees and the assistant referees for matches in the competitions organized by FIFA. The
Referees group interprets the rules of the game and may also recommend the council which are further
submitted to the International Football Association Board (IFAB) to change laws of the game.
• The medical Committee consists of members, who are qualified in sports medicine. Under the organization's
Code of Conduct, sanctions can be imposed if any player, agent or match agent is offended (FIFA, 2016).
• FIFA is an international leading association. It organises major football and beach football tournaments.
FIFA emerged to support the global growth of football (Lincoln Allison and Alan Tomlinson, 2017).

Unethical business practice examined
• Football`s governing body, FIFA officials were witnessed taking millions of pounds
in bribes from the countries for permitting broadcasting rights for games and
holding hosting rights of events since, 2015.
• The two most renowned men in football, Sepp Blatter and Michel Platini were not
allowed to participate in any football related activity, by FIFA`s ethics committee. It
was found that FIFA`s president Sepp Blatter always denied any unethical deeds-
but in September 2015, he too was made the subject of a Swiss criminal
investigation. The investigation revealed that Mr Blatter allowed a TV right deal
through a disloyal payment to European football Chief Michel Platini.
• The FIFA ethics committee recognized the act as an ``abusive execution`` of their
positions. In 2016, FIFA struggled when the outcome of fraud dealing, racketeering
involving major officials was confirmed.
• The widespread bribery news, which was extended through FBI interruption also
raised several doubting questions about the award of World Cup final tournaments,
2010 (Barry Stavro, 2015) Several senior officials from FIFA were caught in a five
star Zurich hotel in December 2015 for the corruption deeds (RFI, 2017).

Ethical standards and the practice was a violation of ethical behaviour.
• FIFA has its own code of ethics in which FIFA complies that person bound by the conduct
should not accept bribes, any gifts or other advantages offered by a party to breach the duty
which is dishonest conduct for the advantage to 3rd party. Officials are not allowed to bribe
anyone in order to gain an advantage for themselves (FIFA, 2009).
• But in 2015, FIFA was caught receiving millions of bribe in return of granting broadcasting
authority and hosting events for games which is unethical according to the code of conduct
(FIFA, 2012).
• FBI (federation bureau of investigation) also asked marketing executives of FIFA, including
Coca-Cola, Hyundai-kia motors, visa and Addidas to nullify its leadership Addidas (Shafi
Musaddique, 2018). As it is already mentioned in FIFA code of conduct that accepting bribes
for 3rd party`s advantage is prohibited (FIFA, 2009).
• Top officials were engaged in this scandal even the President of FIFA accepted the payment
through unethical mode or unfaithfully (FIFA, 2012).

Influence of leadership
• leadership is important in promoting ethical behavior in an organization. Leaders
do set the organizational goals and objectives. Leader communicates and motivates
the employees to work efficiently. (Brown and Mitchell, 2010).
• FIFA corruption scandal report reveals that the FIFA president Sepp Blatter was
involved in the scandal. The marketing executives paid more than $150 million as
bribe to FIFA officials to give broadcasting rights (Yglesias and Stromberg, 2015).
Four signs that unethical leadership influences the behavior-
• Restricting a speak in culture- Organization should pursue a culture in which a
employee can express any issues related to the work and new ideas. For example-
If manager is stealing money from the cash counter, adopting the same thing by the
employees becomes common.
• Employee relations- A leader provides a friendly environment to a new employee.
The US accused 14 FIFA officials on charge of widespread corruption caught by the
FBI (Federal Bureau of Investigation). Lack of fair traits in a leader affects the
employee relationship in the organization. If the two former officials were corrupt,
Other employees would also take unethical steps. People who follow unethical way
to achieve any higher position create resentment among remaining employees
(Brown and Mitchell, 2018).

• Unfavorable perception- In this era, it becomes very difficult to hide the situations
of the organizations from investors and stakeholders. The organization has to keep
its situations transparent. The annual reports of the organization reveals its
mission, vision and also the ways of expansion.
• The world cup is most watched event in the world. It generates a huge revenue
from sponsors, broadcasting and hosting. FIFA corruption scandal dictated by
investigation doubts the transparency and loyalty for allocating World cup
tournaments and funding. Sometimes talking about ethics in front of many leaders
is a deed only when there is a scandal. It is important to talk about the positive
examples of ethical behavior.
• Legal Issues- In every country, state and local government regulates rules and
regulations for business operations. Swiss authorities started looking into the
bribery charges.
• Swiss lawmakers passed legislation that allows checking bank accounts of FIFA
officials involved in corruption scandal (The Guardian, 2014). Executives breaks
law for financial gains can be harmful for employees and customers.
• Leaders, employees and managers who undertake unethical behavior suffer from
legal provisions. Employee who is promoted and earned a position unethically get
troubled by the laws.
• Sometimes large companies think violating laws and paying penalty is lower as
compared to financial return earned by breaking those laws (Zeiger, 2018). If

Cultural implication
• Company culture has a effect on the ethical behavior of employees. A positive corporate culture
motivates the employees to act in a ethical way, so as to create happy work environment. A negative
corporate culture may profit the organization in abundance but invites unethical behavior and also
creates a lot of problems (Mack, 2018).
• Lack of moral leadership- As mentioned in the FIFA corruption scandal, two football players were
involved in the scandal. Not only this 16 more were arrested including vice-presidents in the hotel in
Zurich (BBC, 2015). As the major leader are following unethical ways the employees one or the other
day will advent same behavior. For example- if manager take credit for employee`s work, other
employees will attempt to do the same (Mack, 2018).
• Hypercompetitive co-workers- If a company appreciates its employees by rewarding who profits the
self rather than contributing to the overall interest of the team, the employee may cross ethical rules
to be ahead. For example- when manager rewards on the basis of high performance without knowing
the procedure of achieving. Some employees may use unreliable methods, if the disloyal employee
succeeds, the rest will try to follow the same unethical way (Downe, Cowell and Morgan, K., 2016).

Environment implication
• Local economy- An employee`s job is affected by the condition of the local economy. If
the economy is booming, the opportunities are more and the employees are happy. On
the other hand, when the times are hard and economy is in recession, the
unemployment is high and employees are suffered from the fear of being rejected or
dismissed (Mohr, 2018). The executives from north, central and south paid more than
$150 million as bribe to FIFA officials.
• Competition in industry- The degree of competitiveness in an industry can affect the
ethics of both management and employee, In a highly competitive environment, ethical
behavior towards suppliers and customers may come down when employees bring in
more work.
• FIFA has lost something more than money, trust of soccer fans. 25000 fans gave their
verdict against view by Forza Football app. In the poll of football fans, 69% said they
had lost confidence in football because of FIFA corruption scandal, 43% stated that
they are not enjoying as before after knowing FIFA corruption scandal (Jacobin, 2015).
Appraising the performance without knowing the ways- ethical or unethical
encourages employee to reach on a higher position fast through any way (Mohr, 2018).

Legal implication
• Tightening of Anti-bribery enforcement- Since July 2016, According to Swiss Criminal code private-to-private,
corruption has been criminalized.
• Including sports association, even paying bribes to a 3rd party (Pestalozzi, 2016).The US requested legal
assistance from Switzerland to hand over the documents related to Swiss bank accounts (Lawreviews, 2018)
• .The US requested the arrest of several individuals for breaking the law of not only a country but also affecting
the acts related to bribing and corruption.
• OAGS (Oshwal Amateur Golf Society) started criminal investigation related to the allocation of the FIFA world
cup, 2018 to Russia.
• The OAGS (Oshwal Amateur Golf Society) commenced investigation for fraud and money laundering against
several members of the executive board of organizing a team of German Football Association for the 2006 World
cup (Mendelsohn, 2017). If an individual in the company commits any bribery act, the company and the board
members may also become liable personally (Pestalozzi, 2016).
• The international Court of Justice and international criminal court didn’t solved the criminal conduct by FIFA. The
defendents in the FIFA corruption scandal are the citizens of atleast ten countries. Swiss arrested six of the
defendants from different countries in Zurich.

The scandal impact on organisation, individual and
society
• The existence of corruption at higher level including the president, Sepp Blatter, and many officials. The corruption scandal not
only compromises the quality of the play but also lost fan support all over the world. Corruption at the highest level, FIFA
reduced the strength to deal with problems in match-fixing and affecting fan experience during matches.
• Sponsor executives do not take more responsibility and danger their comfort situation, rather they offer lip service to improve
the game (Davis, 2013). The public was calling president for his resignation from all over the world.
• The public demanded that bidding for 2018 and 2022 world cups should be reopened, the tournaments should be organized
again, maybe the previous results were manipulated. As a sponsor, Visa expects FIFA to take major steps clarifying the issue of
a corruption scandal and rebuilding reputation with strong ethical practices or Visa will reassess its sponsorship.
• The people who follow football ardently and admired FIFA for its work led to loyalty breakdown due to FIFA corruption
scandal.
• A South American Soccer player was involved in FIFA corruption scandal left the court announcing that world`s most popular
sport is no more (USA today, 2017).
• The revenue earned decreased as footfall decreased due to corruption scandal.

Outcome of scandal and its legal
implication
• The corruption scandal was blamed to raise more than double legal cost in 2015 but FIFA
will try to make them considerably down in future (Revill, 2017).FIFA`s annual report
disclosed losses, the reserves fell to $1.048 billion from $1.41 billion in 2015.
• FIFA officials who were guilty and committed illegal acts, especially soccer officials have
good to be afraid of the United States Justice Department (sports illustrated, 2017).FIFA
tried to conduct a investigation so that they can punish the actual wrongdoers within the
football accountability and focus on the game again.
• After the FIFA corruption scandal, the link between bribery schemes and the US lies
because of participation of US banks.
• Most US states have punished ``commercial bribery`` in the state law, which was not
done before (Rose, 2015).Instead of charging the soccer officials and sponsors with
private bribery, this charges them for racketeering conspiracy and fraud.
• • The people who follow football ardently and admired FIFA for its work leads to
loyalty breakdown due to FIFA corruption scandal.
• As a sponsor, Visa expect FIFA to take major steps clarifying the issue of corruption
scandal and rebuilding reputation with strong ethical practises or Visa will reassess its
sponsorship.

The fairness of punishment
• As per the demand of the public as the main leader of the scandal, President Sepp Blatter was dismissed
and replacement became mandatory. On the other hand, remaining officials were arrested not dismissed
from their post (RFI, 2017).
• The officials who followed this scandal blindly should be punished equally if not they should have stood
against the scandal decisions. As every official should follow the ethics and morales personally. Unethical
performance of any individual can affect the working of the whole organisation and also create mess
between the employees.
• The sponsors do not directly participate in FIFA activities were also asked, accused and taken into
consideration for investigation (BBC, 2015).
• Punishment helps to discourage the dishonest from destroying the ethics. Certain bank accounts were
taken into consideration by Swiss law makers to keep a check and punish the criminals (Natalie Wolchover,
2012).
• Regardless of the penalty charged on the corruption and bribe activity. Strict actions were taken against
the wrongdoers. Imprisonment of several players and leaders in Zurich five star hotel (RFI, 2017).

Impact of scandal on ethics
• Ethical theory defines a set of actions of right conduct and moral values. Here in this
case of corruption scandal the virtues of individual, professional and work honesty
are nearly violated (Business jargons, 2018).
• Individual character Ethics- The individual hold some ethics in his/her character in
form of noble human traits- loyalty, understanding, sincerity and self-discipline. Most
importantly the individual characteristics were destroyed. Even some other players
followed the unethical behavior blindly without giving any consideration to
individual characteristics (Scroll.in, 2018).
• Work character ethics- The development of transparency, noble traits such as
honesty, loyalty, trustworthiness, empathy and honor which determine quality of life
through ethical instruments. It is believed that a person with the strong involves
discipline, moral and social virtues to achieve that is actually good for him. The
responsibility of following ethical standards becomes more mandatory, especially for
senior leader. But it was not visible in the FIFA corruption scandal (business jargons,
2018).
• The President and officials were involved in corruption scandal affecting individual
characteristics of all employees in FIFA hurting the personal virtues. Major work
characteristic is dedication towards the work and loyalty. But the senior officials
disturbed the work environment by taking bribes.

Organisational rules and policies to
avoid unethical occurrence in future
• Corruption damages the social fabric of an organization. The major higher level authority and board of directors
should make strict rules ensuring that to commit a unethical practice can be punishable (Verver, 2018).
• The organization should hire only quality people that can make major difference in the ethics of the
organization.
• The leaders should focus more on the right way of doing work and always talk about the positive deed
performed by other organization in terms of ethics.
• The organization should create a transparent culture to ensure that if employee is not comfortable in what is
occurring he could stand up and speak out if they see anything wrong.
• The same goes with incentives and promotion, if the employees turn unethical they should not be promoted to
the higher level. Even if they are promoted to higher level they commits frauds as leaders (Mohr, 2018).
• Although, the state government passed the laws for improper and false working of the organization. Few
commercial bribery regulations were passed to undertake charges for racketeering fraud. But once FIFA has
committed the bribery actions it has to be very careful regarding unethical practices. FIFA tried to retain its
reputation again by winning the trust of potential viewers and audience.

Conclusion
• Corruption can impair the reputation of the organisation go down. Corruption abolishment is very
important to stick to an ethical code of conduct. FIFA has defined a code of conduct. The leaders
were corrupt. (Yglesias and Stromberg, 2015).
• The trust of the audience was no more. FIFA`s culture was affected, the lower level employees were
encouraged to commit faults. FIFA lost people confidence. FIFA leaders were punished because they
received bribe for authorising rights. Corruption abolishment is very important so that the
organisation strictly follow ethical code of conduct (Hamilton, 2010).
• After FIFA`s scandal, the government tightened the rules and regulations for operations, trade
practices and regulates anti-corruption laws. Sponsors backed their responsibility and advice FIFA
to improve its position in the world (Musaddique, 2018).
• The footfall decreased due to the breakdown of audience loyalty. Now commercial bribery will not
be avoided. FIFA was punished and accused to receive a bribe for broadcasting and hosting rights.
The corruption scandal led to the resignation of President from the job and several officials were
arrested. The FIFA officials broke the ethical behaviour of loyalty (Sekhon, 2016).

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