Should We Hold Corporate Sponsors Responsible for Corruption Scandals?
Nike's role in the Kenya bribery scandal
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In a front-page story in last Sunday’s New York Times, the paper reported on an alleged bribery scandal involving Nike and three top officials of Athletics Kenya currently under investigation by the IAAF Ethics Commission. A few years ago, the governing body of Kenyan athletics was reportedly being wooed by Chinese sporting goods company Li-Ning when Nike, fearing it could lose its sponsorship deal with the East African running powerhouse, negotiated a new contract in which they agreed to pay Athletics Kenya, “an annual sponsorship fee of $1.3 million to $1.5 million—plus $100,000 honorariums each year and a one-time $500,000 ‘commitment fee,’” as reported by the Times.
It was the latter part of this deal that aroused suspicion.
“Whenever I see the words ‘commitment fees,’ ‘commitment bonuses,’ ‘access fees,’ ‘access bonuses,’ that for me raises a red flag,” John Githongo, a former anti-corruption consultant who used to work within the Kenyan government, told the Times. “It’s language used to dress up bribes traditionally,” Githongo said.
If people were as turned off by greedy executives as were incensed by PED-abusers, few corporations would risk such behavior.
After Nike refused a request by Athletics Kenya chairman Isaiah Kiplagat that the $500,000 be wired to his personal bank account, Kiplagat sent an urgent email to a Nike executive about the fee, which was then promptly transferred to the official Athletics Kenya account. Within days, according to the Times, the money was withdrawn by Kiplagat and two other high-ranking Athletics Kenya officials. Since the news was first made public last November, Kenyan investigators involved in the case have criticized Nike, claiming that the company must have known about the shady intentions of Kiplagat and company. Such a claim, however, would be very difficult to prove. Due in part to the legal no-man’s-land in which some sports federations operate, it is also far from clear that Nike could be accused of breaking any laws.
Regardless of how this case turns out, it raises the important question of the extent to which we should hold corporate sponsors accountable in abetting corrupt sports federations.
The issue featured prominently in last year’s FIFA scandal; when Sepp Blatter, president of soccer’s benighted governing body, refused to resign despite numerous allegations of FIFA officials being involved in cases of money laundering and bribery totaling tens of millions of dollars, FIFA’s sponsors eventually began to call for him to step down. Comedian and soccer fan John Oliver was only half-kidding when he called corporate sponsors “the only group even more powerful than world government,” and offered to abase himself by drinking a Bud Light Lime, if Budweiser, a major FIFA sponsor, helped bring about a Blatter resignation.
If the people in charge at Athletics Kenya do indeed turn out to be crooks, should we blame Nike for turning a blind eye when the writing was on the wall? To answer this question, it’s important to take a step back and state the obvious about why Nike was sponsoring Kenya in the first place. Running is extremely important to Nike’s brand. The Adidas-sponsored Ethiopian athletics team might beg to differ, but, generally speaking, Kenya has the best professional distance runners in the world. Nike wants those runners wearing Nike because it’s great exposure for the company.
By itself, it seems unlikely that a scandal in the bureaucratic operations of Athletics Kenya would tarnish Nike’s brand any more than FIFA money laundering will make the world less enthralled with Cristiano Ronaldo. This might change, however, if the powers that be at Athletics Kenya are also found guilty of covering up the transgressions of Kenyan athletes who fail doping tests—a charge that has been made against Kiplagat and the other officials, alongside their alleged pilfering of Nike money. Suddenly, rather than just the dubious suits helping themselves to sponsorship funds, it would be the Nike-clad runners who are exposed as cheaters.
According to a recent BBC article, more than 40 Kenyan athletes have failed drug tests since 2011, and the country is in a fight against time to convince the World-Anti-Doping-Agency that it is on the up and up. The worst-case scenario for Athletics Kenya is that it fails to meet WADA standards in time and is subsequently prohibited by the International Olympic Committee from participating in this summer’s Olympic Games. For Nike, that would mean that the Kenyan runners it so coveted as brand ambassadors might, in the mind of a potential consumer, be more readily associated with performance enhancing drugs than world record times. You don’t need an MBA in marketing to know that is not what Nike wants.
Circling back to the question of corporate responsibility, we should acknowledge that the “moral compass” guiding the behavior of the companies who fund athletic federations will always be influenced by the concerns of the people who buy their products. FIFA's sponsors, for instance, only acted once public outcry become too loud to ignore. If as many people were turned off by greedy executives dipping into the sponsorship pot as were incensed by PED-abusers, few corporations would want to risk being associated with such behavior.
What’s unique about the Athletics Kenya case is that its leaders are currently on trial for both crimes.