FIFA and the wider problem of corruption

bribery.jpg

Sepp Blatter, re-elected as head of FIFA, gained so many first round votes that his opponent withdrew.  Many of those votes came from Africa, Latin America and Eastern Europe.  Not many came from Western Europe and North America.  How could the man be re-elected after presiding over an administration that for decades has involved bribes to delegates and illegal payments by sovereign governments? 

The answer may be simple.  In many of the countries whose delegates gave him votes, corruption is a normal part of everyday life.  You want to do business?  You bribe a bureaucrat.  You want to move goods across the country?  You have cash ready at the police checkpoints.  You want to win a government contract?  You transfer funds into the secret foreign bank account of the President's sister.  Corruption is endemic, and their people suffer its consequences.  This could be why so many delegates seemed relatively sanguine about its exposure in FIFA.

That corruption is so widespread is a major factor holding back economic growth in developing economies.  The Organization for Economic Co-operation and Development estimates it at more than 5% of global GDP, with the World Economic Forum putting it at US$2.6 trillion, and the World Bank putting the amount paid annually in bribes at over US$1 trillion.

It adds costs to business activity.  The kickbacks have to be factored into production costs, raising prices and therefore reducing the volume of activity.  Less wealth is created than there would be without it.  Corruption is like a tax, but a particularly toxic one because of its covert and unpredictable nature.  Tax incidence is public; it can be calculated and taken account of; but no-one publishes tables of bribes that will have to be paid.

Corruption causes resources to be misallocated, with contracts being awarded to firms that would not have won them in open competition.  Bribes to ministers lead to construction projects for which there is no genuine market demand.  Those with access to decision-makers, and with resources to bribe them with, are advantaged at the expense of those lower down the social scale with neither influence nor resources.

Because corruption is illegal, its prevalence undermines respect for the law.  It also corrodes the public trust that is part of the background of successful market economies.  The only antidote to it is a government with the moral integrity to uphold the law, and for a legal system that remorselessly exposes and punishes the perpetrators.  The FIFA scandal is about more than football; it gives us another glimpse into a worldwide problem.