How do organisations clean up after corruption scandals?

Hisao Tanaka, president of Toshiba Corporation, and two top executives resigned after an independent investigation found that earnings had been improperly inflated by US$1.2 billion under his watch.

This blog post is part of a series
drawing on articles from the
Global Corruption Report: Sport.

Simultaneously, FIFA’s president Sepp Blatter announced that he was staying on for another seven months, despite the arrest of numerous top FIFA officials and widespread corruption on his watch. FIFA appears to be looking to Domenico Scala, who is on the FIFA payroll, to lead a new reform effort.

  • Find out what Transparency International recommends for fixing FIFA.

The vastly different approaches to investigation by Toshiba and FIFA help to illustrate the difference between an accountable organisation and one that plays by its own rules. Here is a recap of what Toshiba did leading up to the leadership resignations:

Upon learning of possible wrongdoing, Toshiba set up a “Special Investigation Committee” chaired by the chair of its board of directors. This committee included experts from outside Toshiba.

Upon learning of the scope of possible wrongdoing, this is what Toshiba did (more details here):

In order to further enhance the confidence of stakeholders in the results of the investigation, the company has decided to change the framework of the investigation from one conducted by the current Special Investigation Committee to one conducted by an Independent Investigation Committee that conforms to the guidelines prescribed by the Japan Federation of Bar Associations (JFBA) by being composed solely of fair and impartial outside experts who do not have any interests in the company.

How were the members of the Independent Investigation Committee chosen?

The members of the Independent Investigation Committee are currently being selected from among experts in the fields of law and accounting, based on the recommendations of the outside members of the Special Investigation Committee, and the company plans to promptly disclose the composition of the Independent Investigation Committee (IIC) once the selection process has been concluded.

The announcement above was made on 8 May 2015. The IIC reported this week and the Toshiba CEO resigned immediately.

Here are some key differences between how Toshiba and FIFA handle alleged scandal:

• Toshiba has an internal process for setting up an investigation of alleged wrongdoing that involves external experts. FIFA does not.
• Toshiba has a board of directors. FIFA does not.
• Toshiba has a process to create a truly independent investigatory body. FIFA does not.
• Toshiba relies on the standards of an outside body to guide its investigative process (the JFBA). FIFA does not.
Bottom line? Toshiba is accountable to its stakeholders. FIFA is not.

This issue is not complicated. Toshiba’s guidelines for its independent investigation are barely one and a half pages. Why FIFA should not practise standards of accountability equivalent to Toshiba’s is a question that might be posed to those wanting to assume its presidency after Sepp Blatter. Implementing corporate controls like those in the business world should be a no-brainer for FIFA. But it hasn’t happened yet.

Carousel image: Flickr, danie;

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Roger Pielke

About Roger Pielke

Roger Pielke, Jr. is Professor of Environmental Studies at the University of Colorado. He has also researched governance practices at sporting organisations.

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  1. Prometheus » Blog Archive » How Do Organisations Clean Up After Corruption Scandals? - 24 July 2015

    […] Transparency International July 24, 2015 […]