From corruption & scandal to reform: How the Brazilian Olympic Committee overhauled its governance model


Published 20 April 2018 By: Roberto de Palma Barracco

Brazilian flag with Olympic medals

Operation Car Wash (Operação Lava Jato) is an on-going criminal investigation being carried out by the Federal Police of Brazil (Polícia Federal1) since March 2014. Initially a money laundering investigation, it has expanded to cover allegations of corruption at the state-controlled oil company, Petrobras, where executives allegedly accepted bribes in return for awarding contracts to construction firms at inflated prices.  Scandals have kept mounting throughout the operation, and the sports industry has not escaped its attention. In 2017, the Brazilian Olympic Committee2 (Comitê Olímpico do Brasil – COB) underwent comprehensive reform as the Operation trickled down through COB’s structure and forced it wide open.

This article tells the story of the COB’s reform, examining specifically:

  • the events that kick-started the reforms – Operation Carwash, Rio’s Olympic selection and the “Napkin Party”, and the arrest of President Carlos Nuzman;

  • the process of implementing the reforms – the foundational principles, the internal politics and the importance of athlete representation;

  • the key reforms passed to COB’s statute – a run through of the main changes to COB’s internal governance structure and processes.

The author’s objective is to give readers a comprehensive oversight of what has happened at COB to date, so that the international community can continue the dialogue and ensure a fresh path is cleared towards a new era of representative and corruption-free Brazilian Olympic sports. This can in turn serve as a beacon for the rest of Brazil.

Clearing the path for reform: Operation Car Wash, the Napkin Party & the arrest of Carlos Nuzman

The background to COB’s reform is as relevant as the reform itself.3 As the scandals burst in 2017, the Brazilian Federal Police arrested COB’s president, Carlos Arthur Nuzman, on corruption charges. The International Olympic Committee (IOC) suspended the COB4; and Nuzman left office in a matter of weeks. These events were dubbed as a “blessing” and as “the best Olympic legacy Brazil could have had5 as they led to the reform and the future of Brazilian Olympic sports.

Operation Carwash comprises a growing number of investigations6 known for catchy nicknames7, with the work of the Federal Police supported by8 the initiatives9 of the Federal Public Ministry (“Ministério Público Federal10). The operation focus led to greater judicial review and public scrutiny of public-private partnerships, including those involving Rio de Janeiro State and its capital city – which of course hosted the 2016 Summer Olympic Games.

In this context, the operation branched out to investigate the “napkins party” (“Farra dos Guardanapos”), an event that happened in Paris, France back in late 2009. The investigation deemed the “party” a celebration of Rio de Janeiro’s choice as the 2016 Summer Olympic Games host city – although it in fact occurred weeks before the Copenhagen event in which the IOC officially chose the host city. The investigation found out that the members of the Rio de Janeiro Government, of the Brazilian Bid Committee, and industry players knew in advance that the IOC would select Rio as the host city.

This investigation was aptly nicknamed Operation Unfair Play11 - given that it is precisely what the “Polícia Federal” and the “Ministério Público Federal” found out via a businessperson from Rio de Janeiro (known as “King Arthur”) who had paid Lamine Diack to sway votes in Rio’s favor through the former IAAF president son’s accounts. The investigation tracked the money back to Sérgio Cabral, who was Rio de Janeiro State’s Governor at the time. The investigation concluded12 that this was possible due to the intermediation of one man13, Carlos Arthur Nuzman14, then COB’s president – or perennial dictator for some15.

This situation was, to say the least, uncomfortable for the IOC. Aside serving as COB’s president, Nuzman had a part to play at the Coordination Commission for the Olympic Games Tokyo 202016. The IOC had no choice but to intervene, especially given its Olympic Agenda 202017 and its goal of transforming Olympic sports worldwide18 through good governance practices19 and compliance20 in order to ensure greater integrity 21and transparency22 while giving athletes23 more than a voice24.

On 6 October 2017, as soon as the Brazilian “Polícia Federalarrested Nuzman25, the IOC’s Executive Board issued a decision26 based on its Ethics Committee recommendation27. The decision hit both COB and its president with a provisional suspension28 due to “possible corruption ties29”, and meant that the IOC would not transfer monies to COB until it improved its governance model.

This turmoil set the stage for a much-needed governance overhaul. However, first, the COB had to deal with Nuzman’s fallout30. In jail, Nuzman addressed a letter31 to COB’s General Assembly, informing them that he decided to step down from his throne32. His lawyer read the letter during an extraordinary meeting on 6 October 2017. This meant that COB had to elect a new president, and its General Assembly opted for33 Nuzman’s vice-president, Paulo Wanderley34. His first act as COB’s elected president was to set up a Reform Commission that had to review COB’s statutes.

So the political chaos and corruption scandals that erupted throughout the country eventually cleared a path towards a fresh start for COB; a start that, it was hoped, could be a beacon not only to the Brazilian Olympic sport, but also to Brazilian society as a whole.

 

The attempts and frustrations of reforming COBs governance model

COB’s fresh start led to the IOC’s revision of its decision.35 On 31 October 2017, the IOC Executive Board36 lifted COB’s suspension as long as it kept showing continuing efforts towards good governance practices. This meant it was down to the COB’s Reform Commission to push through new governance proposals in an effort to transform what previously seemed unchangeable.

The COB Statutory Revaluation Commission37 would receive via email up until 10 November 2017 suggestion for COB’s Statute reform. It was the Commission responsible for the analysis and systematization of the Reform Commission’s proposals. The Revaluation Commission was comprised of the presidents of three National Sports Federations’ plus the president of the COB’s Athletes Commission38. The Commission would vote on a statute proposal at 22 November 2017 General Assembly in Rio de Janeiro, where the COB sits.

On 13 November 2017, the Commission presented its proposal39 to the Brazilian Olympic Sports Federations. Its suggestions included

  • changes to the COB electoral procedures, greater athlete participation on the COB’s decision-making efforts, and

  • improvements to its compliance and governance mechanisms.

The Commission framed those efforts as “a way towards IOC’s Agenda 2020,” while taking into account adjustment 40due to the Brazilian legislation41 and the Brazilian Sports Ministry.42

COB’s path towards a fresh start was proving to be the best Olympic legacy for Brazilian Olympic sports, and that is how this idyllic proposal met with the harsh reality of sports politics during the “I Brazilian Olympic Committee General Assembly”.

The COB General Assembly passed the proposal43 forty-two days after the election of its current president, with, - unfortunately - a single change: COB’s General Assembly would have only five athletes on its composition and not twelve as on the original proposal.

The president of the Brazilian Shooting Federation made the counterproposal that went to voting. The result was a tie (15 - 15). However, the president of the Brazilian Rugby Federation left before the voting ended and had his vote annulled by a move44 of the president of the Brazilian Table Tennis Federation - which resulted in the counterproposal passing.

This arm-wrestle put an end to the “I Brazilian Olympic Committee General Assembly”, but it was not the end of COB’s reform.

 

The missing link: finally ensuring athlete representation

The COB had a rare opportunity to enter into a new era. The political maneuverings that undermined this were, to the author and many others, very frustrating, as COB had appeared to have squandered its chances to reform.

However, another external force entered the scene. The Sports Ministry decided to step into the fray (again45) and reminded COB of its opportunity to become a beacon for corruption-free Brazilian Olympic sports. It did this via a public letter addressed to the COB.

The Sports Ministry stated in its letter46 that it would not certify sports entities without sufficient athlete representation, and would cease to transfer public funding to COB and its affiliated entities. Necessarily harsh measures that echoed the COB Athletes Commission47 words in a call for a transformation and not only a mere change. A transformation that would give the athletes a strong voice in COB’s General Assembly.

In response to public outcry, the COB called a new General Assembly on 6 December 2017. In this “second round”, the General Assembly amended48 the COB statute49 in order to guarantee a place for twelve athletes in it. This was passed unanimously,50 and ensured that athletes would have a voice in the COB’s decision-making processes.

 

The key reforms to COB’s governance model

In summary, the main changes to COB’s governance model are as follows:

General Assembly composition:

  • The COB General Assembly added to its composition athletes amounting to one third of its affiliated entities.

Electoral procedure:

  • The electoral procedure is open to any Brazilian that is at least eighteen years old as long as the person has the support of at least three General Assembly members. Also, the election takes place on the last trimester of the year in which occurs the Summer Olympic Games;

  • The COB President’s term lasts four years with up to one possible reelection; and

  • COB extinguished its lifetime members’ category on its General Assembly.

Management Board:

  • COB created a Management Board to replace its Executive Board. The Management Board is responsible for setting COB’s strategy and good governance practices.

  • The COB Management Board is comprised of an IOC representative, COB’s President and Vice-President, COB Athletes Commission’s President and Vice-President, eight COB’s affiliated entities representatives, two independent members. The COB General and Financial Directors take part on COB’s General Assembly meetings but are not be able to vote;

  • The COB replaced the role of Secretary General with a General Director who COB’s president appoints and the Management Board approves; and

  • COB created an Advisory Committee to the Management Board that supports the Board in its decision-make processes, and serves as a hub of COB partners’ interests.

Ethics Board:

  • COB created an Ethics Board that is responsible for the COB Ethics Code and is composed by five members – three who must be independent and not have ties to any sports entity;

  • COB created an Integrity Committee, which is part of the Ethics Board and which has as its tasks the background checking of election candidates and of COB employees.

  • COB created a Compliance Committee tasked with ensuring the conformity of COB’s procedures, including possible conflicts of interest. The Compliance Committee is part of the Ethics Board; and

  • COB created the role of Compliance Officer whom the General Director appoints and the Ethics Board approves. The Compliance Officer reports to the Ethics Board, and the Board is solely responsible for removing the Compliance Officer.

Supervisory Board:

  • COB reshaped its Supervisory Board. COB’s General Assembly elects the Supervisory Board’s three members independently of the President and Vice-President “party”.

Statute mandatory review:

  • COB has to review its statutes every twenty-four months.

It is hoped that these changes will lead to a lasting transformation, and it seems - for now at least - that this is happening. The current reforms are also a first tentative step towards COB’s compliance with the IOC’s Agenda 2020, which continues to demand changes to COB’s status quo. For instance, on 31 January 2018, COB made available51 on its website52 the salary of its employees alongside the percentage paid by public funding. It showed that it has cut its costs53 by measures such as moving its headquarters to the Maria Lenk Aquatics Centre (the Parque Aquático Maria Lenk54). It has also made available some of its other internal documents online55. Such actions resulted 56in the IOC Executive Board’s decision57 to lifting COB’s suspension without further measures.58

 

The future now” or “the future again”?

To the author, the future seems to be now, and there seems to be a burgeoning transformation at the COB. A fresh new start may lead to a path towards full compliance with the IOC’s Agenda 2020, objectives and corruption-free sports in Brazil. We remain in hope that the future does not prove to be a repeat of the past. A renewed sports culture can only surface if there is room for growth of a new generation, and that remains to be proven.

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About the Author

Roberto de Palma Barracco

Roberto de Palma Barracco

Roberto de Palma Barracco focus his practice on crisis prevention, conflict management and negotiation in the sports & entertainment industries.

He is a Brazilian Bar Association certified lawyer, OAB/SP; Summer Sports Institute University of Oregon School of Law faculty; CAMES neutral; Mackenzie Presbyterian University researcher IB|A Alliance Institutional and Academic Relations advisor; Universidade do Futebol columnist.

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