CONCACAF - REFORM FRAMEWORK
RECOMMENDATIONS OF THE SPECIAL COMMITTEE (JULY 4, 2015)
In the wake of the federal indictments against certain members of FIFA and CONCACAF,
including the President and an Executive Committee member of CONCACAF, as well as the provisional ban from all football related activities by the FIFA Disciplinary Committee of the CONCACAF General Secretary, the Special Committee submits to the Executive Committee (
ExCo) for its approval this reform framework to address and remediate certain governance, operational and reputational issues in respect of CONCACAF.
This framework attempts to address deficiencies in the governance and operations of
CONCACAF that have put CONCACAFs reputation, finances and ultimately, its mission at risk. The Special Committee recommends that the Confederation immediately undertake a process to enact changes to its governance structure, compliance programs, contract processes and operations to improve efficiency, prevent fraud and self-dealing and increase transparency - some of these recommendations have been implemented already, some can be implemented immediately and others will require additional discussion and time to implement, including amendments to the Statutes of the Confederation which must be approved by the Congress.
Since the announcement of the indictments, CONCACAF has with urgency and determination moved to strengthen operations and governance to provide tangible evidence that it plans to right its ship. It is important that CONCACAF not just talk about reforms, but implement processes to ensure that those reforms have impact and effect greater governance and transparency in order to position CONCACAF as a leader among sports organizations in terms of breadth and strength of reforms.
Below is a summary of what has been done to date and what remains to be done, including summary recommendations.
WHAT HAS BEEN DONE TO DATE:
- ExCo action to provisionally ban Jeffrey Webb, Eduardo Li and Enrique Sanz - May 28, 2015 and June 1, 2015
- ExCo action to appoint Special Committee of the ExCo to oversee on a temporary basis day to day operations of CONCACAF - May 28, 2015
- ExCo approval of charter of Special Committee - June 3, 2015
- ExCo approval of hiring of Alvarez & Marsal to assess and review finance and operations - June 22, 2015
- Special Committee review and cancellation of all non-essential programming and events - ONGOING
- Special Committee, Alvarez & Marsal and Sidley Austin LLP to review all expenditures, vendor contracts and sponsor contracts - ONGOING
- Sidley Austin LLP to undertake an internal investigation to identify areas of fraud and self-dealing - ONGOING
- CONCACAF to continue to cooperate with U.S. federal and Swiss authorities in their investigations -- ONGOING
INITIAL RECOMMENDATIONS OF CHANGES IN GOVERNANCE AND OPERATIONS:
Corporate Governance:
- Require a minimum number of members of the ExCo to be independent - not affiliated with any football-related activities of any member association
- Impose term limits on all members of the ExCo, including the President
- All senior officer and ExCo compensation to be reviewed and approved by independent members of the Compensation Committee on an annual basis and approved by the ExCo
- ExCo member compensation to be approved by Congress on an annual basis
- Review and recommend changes to ExCo composition, nomination and election procedures to ensure greater representation and prevent entrenchment
- Appoint independent members to a Governance Committee of the ExCo to evaluate governance and transparency on an annual basis; make report public to members
- Provide annual training to ExCo and officers on duties and corporate governance
Improve Compliance Programs and Prevention of Fraud:
- Review and adopt stronger related party transaction policies - all employees and ExCo members must certify on an annual basis compliance as to policies, including restrictions on transactions with immediate family members and formal processes for disclosure and recusals for ExCo members for conflicts of interest
- Code of Ethics and Conduct - to be revised and posted on website; all employees and ExCo members must certify compliance on an annual basis
- Establish the position of Chief Compliance Officer with responsibility for overseeing the compliance program and with direct reporting lines to General Secretary and independent members of Audit Committee
- Implement whistleblower hotline to report directly to Audit Committee
- Appoint Chief Legal Officer with significant experience in corporate compliance to create a more significant internal legal department to manage contracts, documentation and legal liability, including human resources function
- Review process for negotiating and approving all vendor contracts, including sports marketing and sponsor contracts
- Implement a pre-approved vendor system for all contracts with CONCACAF, including credit and background checks for all vendors.
- Impose audit rights of CONCACAF upon vendors in contracts for compliance with bid processes and covenants regarding bribery and compliance with Code of Ethics and Conduct
- Retain outside consultant(s) to improve bid process, audit counterparties for bribery and fraud and review internal controls, including expense and reimbursement controls
- Further review of commercial and employment contracts to identify contracting best practices to protect CONCACAFs interests and rights in the future (including standard termination provisions for violations of CONCACAF Code of Ethics and Conduct, clawback policies for senior officers and vendor contracting policies)
- Provide training to all employees, officers and ExCo members relating to the Code of Ethics and Conduct, anti-bribery processes, anti-money laundering and other aspects of the compliance program
- Evaluation of all insurance policies and annual evaluation by ExCo of risk to the enterprise,
- including IT, brand and vendor risks
Transparency:
- Make available publicly annual financial statements and budget of CONCACAF on website
- All officer and ExCo compensation reported under IRS Form 990 to be publicly available on CONCACAF website
- Post charters of committees of the ExCo to CONCACAF website (e.g., Audit, Compensation, Governance and Special Committee) and any key compliance program documents such as Code of Ethics and Conduct, governance guidelines, vendor policies etc.
- Agenda of ExCo meetings to be made available to all members
Implementation:
- Special Committee to have powers to implement such recommendations with approval of ExCo and to recommend proposed revised Statutes to be approved by Congress
- Alvarez & Marsal to work with Special Committee to manage day-to-day operations
- Sidley Austin LLP to provide counsel, including review of policies, contracts and other documents, and manage internal investigation
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Special Committee of the Executive Committee
- Justino Compean
- Sunil Gulati
- Victor Montagliani