Can Switzerland’s new “Lex FIFA” combat corruption within international sports federations?
Published 25 November 2015 By: Roy Levy
This article is of interest to administrators at international sports federations, national governing bodies and the lawyers that represent them. This article will also be of interest to sports enthusiasts that are interested in sports governance and in particular how the legal developments in Switzerland impact the development of sport globally.
In 2012, this author raised the fact1 that Switzerland was planning to address gaps in Swiss law that made it difficult for enforcement authorities to prosecute private persons who bribe or accept bribes in relation to their activities.
On 10 September 2015, the predicted amendments to the law finally occurred, with Swiss parliament passing the new Articles 322 octies, novies and decies of the Swiss Penal Code (known colloqially as “Lex FIFA”), which are expected to enter into force in mid-2016.2
The new laws are particularly relevant to the field of sports because they will, among other things, affect the international sports federations based in Switzerland. This article explores the background to the new laws, explains what they say and do, and comments on whether they are likely to succeed.
Why was Lex FIFA introduced?
Until 2006, only bribing public authorities' officials was considered a crime in Switzerland, while bribing persons working in the private sector, such as those within sports organisations, was not.
In 2006, following pressure from the Organisation for Economic Co-operation and Development (OECD), a new article was introduced into the Swiss Act against Unfair Competition3 (Unfair Competition Act) prohibiting the active and passive bribing of private persons (i.e. proposing and accepting individual favours in exchange for a service).4 However, the article suffered from two key constraints.
Limitations of the Unfair Competition Act
First, as it was contained within the Unfair Competition Act, it only applied in the sphere of commercial competition, which does not always easily cover the actions of sports governing bodies.
For example, according to the opinion of the Swiss legislator, two cities making bid to a Swiss sports governing body for the same sports event are not considered competitors, as they are not in direct competition.5 So, if an executive of such a governing body accepted a bribe to award (or influence the awarding) of an event to one of the bidding cites, it would not be regarded as a crime under the article, even if the bribe was accepted in Switzerland. For example, if a member of the FIFA Executive Committee were to have accepted money for their vote in a bidding process for the FIFA World Cup, they would not have to fear criminal charges in Switzerland, even if the offence occurred within in Switzerland.
Secondly, even in cases of commercial competition, the Swiss prosecutor could only start an investigation if an organization, individual or group filed a complaint about alleged malpractice within its own ranks. Where an allegation was based only on media reports, for example, the prosecutor was not allowed to investigate.
It is thus perhaps of little surprise that not a single person was convicted for bribing a private person under the article. Again, this can be contrasted to the bribing of public authorities that entails an automatic prosecution6 under the Swiss Penal Code.7
Governments aim to improve oversight of sports federations
In addition to the above gaps in the law, the Swiss government has, in the face of both internal and external pressures, been trying to improve oversight of Switzerland’s sports federations for several years.
The legislative process culminating in the recent new laws was actually first initiated in 2010, after it became public that two undercover reporters from the Sunday Times succeeded in buying two votes for the upcoming election of two FIFA World Cups 2018 and 2022.8
After this, in 2012, the Federal Sports Office produced a Report on Corruption9 for the government, and its recommendations went on to form part of a wider set of legal reforms that are together known as “Lex FIFA”.
During the review process, on 2 September 2013, FIFA filed comments to the Swiss Department of Justice stating that it did not support the proposed reforms because they seemed to be specifically designed to target FIFA, rather than be generally applicable.10 It submitted a commissioned expert report in support of its arguments. UEFA on the other hand supported the amendments.
Notwithstanding FIFA’s comments, the Swiss government continued with the reforms and, in December 2014, parliament voted to designate as “Politically Exposed Persons” - and so subject to corruption investigations - all leaders of sports organizations and top officials based in Switzerland (a reform that is also part of wider money-laundering legislation).11
On 10 September 2015, the Swiss parliament passed the most recent and high profile amendments to Swiss law. Notwithstanding the government’s desire to achieve greater oversight of sports federations (and the “Lex FIFA” name12), the new laws actually form part of a wider set of reforms aimed at addressing private sector corruption, and apply to all private persons regardless if they work at a bank, a law firm, or a sports organization. It is purely coincidental that the new laws were passed in the shadow of FIFA’s most recent high profile corruption scandal.
What are the key provisions of “Lex FIFA”?
The new laws took the form of amendments to the Swiss Penal Code – namely the introduction of new Articles 322 octies, novies and decies to the Swiss Penal Code.
The principal effects of the amendments are to enhance two important aspects of the nation’s criminal corruption laws (which effectively addresses the gaps left under the Unfair Competition Act set out above):
- It will be an automatic criminal offence for anyone to give or accept bribes. Hence, it is no longer necessary to file a criminal complaint for the prosecutor to start investigating.
- The bribing of private individuals is no longer stipulated in the Unfair Competition Act, but are moved to the general Swiss Penal Code. This means that corruption of individuals will be punishable even if there is no competitive situation.
Under the new laws, private corruption will be punishable by a maximum three-year jail sentence. Sanctions will apply to firms, private associations and sports federations. The new laws makes it possible for federal prosecutors to launch corruption probes against the 60 international sporting federations, including FIFA, IOC and UEFA, that are based in Switzerland. The amendments are expected to enter into force mid-2016 and will not have retrospective effect.
What are the limitations of Lex FIFA in Fighting Corruption?
The new laws are certainly a step in the right direction. They mean that the prosecutor can initiate investigations without a criminal complaint from a person, and there need not be any situation of competition for a conviction.
However, in terms of their effectiveness at addressing corruption at Switzerland’s international sports federations, there are a few limiting factors to consider.
Jurisdictional limits for prosecuting individuals
First, the laws have jurisdictional limits. A person can only be convicted under the Swiss Penal Code if the crimes they are accused of were committed in Switzerland, or if the offence has taken effect in Switzerland (under the principle of territoriality13).
Taking the example of FIFA, with the exception of Mr Blatter, all members of FIFA's current executive committee (as per October 2015) are non-Swiss nationals who live outside of the Swiss territory, and so their accountability to the new laws is limited. Although, if a person committed a bribery offence abroad, Switzerland could in theory prosecute and charge them under Treaty CETS No. 173 from 27 January 1999 on Criminal Law Convention if they were to enter onto Swiss soil (although it is doubtful if this will ever be done in practice).
But…the federation can also still be held liable
However, it must be noted that it is not only the individual person who committed the bribe that can be convicted under the laws, but also their “undertaking” i.e. the international federation, company or organization respectively, that failed to prevent it. The Swiss Penal Code provides specifically with respect to bribery in an organization that:
"[…] the undertaking is penalised irrespective of the criminal liability of any natural persons, provided the undertaking is responsible for failing to take all the reasonable organizational measures that were required in order to prevent such an offence."14
In such cases, the “undertaking” can be sanctioned with a fine not exceeding 5 million Swiss Francs. In other words, FIFA or any other sports federations based in Switzerland, may be convicted even if the person committed the bribe abroad, if it cannot prove that it took all the reasonable organizational measures in order to prevent such an offence.
How can Corporate Governance in Sport be Strengthened?
The knock-on effect of this should mean that the international federations based in Switzerland strengthen their corporate governance by putting the necessary measures in place. Such measures may include, for instance (to the extent they are not already in place):
- implementing the necessary regulations such as a code of ethics and an anti corruption code etc;
- setting up appropriate checks and balances;
- setting up (independent) disciplinary bodies which can (and will) impose severe sanctions;
- decentralising power within the organization (the more people that are in charge, the more difficult it is to bribe them);
- setting-up approval processes if the value of a deal exceeds a certain limit;
- implementing regular supervisions;
- conducting internal and external audits;
- conducting integrity checks of persons in charge;
- requesting regular integrity confirmations from board members and senior managers;
- paying competitive salaries;
- putting in place a proper whistleblowing system with adequate protection for the whistleblower.
The long overdue amendment of the criminal law will help the Swiss public prosecutors in their fight against corruption, particularly at Swiss based sports organisations.
As for the effects on Switzerland’s international sports federations: while jurisdictional constraints may mean that we don’t see a significant rise in prosecutions and convictions of corrupt individuals, one remains hopeful that the new laws will catalyse internal efforts to introduce all necessary measures to prevent corruption.
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- Tags: Anti-Corruption | Criminal Law | FIFA | FIFA Executive Committee | Football | Governance | Lex FIFA | Regulation | Swiss Penal Code | Switzerland
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Roy is an attorney-at-law, at Probst Partner AG, Zurich, Switzerland. He specialises in litigation and arbitration relating to sports law e.g. disciplinary and ethical matters (challenging sanctions), transfer disputes, training compensation, eligibility issues, TV rights, doping, match fixing, players/agents contracts. He regularly represents clubs, federations, players and coaches before the judicial bodies of FIFA, UEFA and the Court of Arbitration for Sport (CAS). He also has expertise in employment, intellectual property and media law.