The year in governance

Last year saw numerous governance scandals across all sectors. We take a look at what had people talking in 2015.

May

Fifa

Early on 27 May in Zurich, Swiss police arrived at a five-star hotel at which a Fifa meeting was due to be held. The police arrested six Fifa executives over the bidding process for the 2018 Russia World Cup and the 2022 Qatar World Cup. Fifa President Sepp Blatter and UEFA President Michel Platini were also accused of being involved with corruption. Amid the scandal, Sepp Blatter managed to be re-elected to his position as President. He subsequently announced a resignation but then did not resign, to everyone’s confusion. Alongside this, Fifa officials were indicted by the US Department of Justice for taking $150 million in bribes while awarding Fifa broadcast rights.

Leo Martin, Director of Good Corporation, analyses the scandal in his article ‘Moving goalposts’.

July

Toshiba

In July, Toshiba, the 140-year-old Japanese electronics conglomerate, was at the centre of an accounting scandal – relating to accusations of overstating its profits over a six-year period. The problems allegedly came from employees and top management understating costs on long-term projects. This resulted in a profit overstatement of at least 151.8 billion Yen ($1.2 billion).

The Japanese government said the scandal undermined investors’ confidence in the country. It also led to the resignation of Hisao Tanaka, the company’s President and Chief Executive, Norio Sasaki, Vice-Chairman, and Atsutoshi Nishida, an adviser.

Read Peter Montagnon, Associate Director at the Institute of Business Ethics, commentary on the issues in ‘Toshiba’s turbulent priest’. Leo Martin, Director of Good Corporation, examined the company’s culture in ‘A rotten heart’.

August

Kids Company

On 5 August, the now infamous charity Kids Company closed over a row about funding, amid scrutiny of its senior management, financials and performance.

The charity was founded in 1996 by Camila Batmanghelidjh in London and provided support to 36,000 vulnerable young people, operating in Liverpool, Bristol and London. By the time of its closure, Kids Company employed more than 600 people and had high profile supporters, including Prime Minister David Cameron. This compounded the scandal as there were claims that civil servants were nervous about the way the charity was funded with public money, but were overruled by the prime minister’s office.

Read Louise Thomson, Head of Policy (not-for-profit) at ICSA, analysis of Kids Company’s collapse in ‘Damaged beyond repair’.

September

Volkswagen

On 3 September Volkswagen admitted to a closed meeting with the US Environmental Protection Agency (EPA) that it had been cheating in vehicle emission tests by making its cars appear less polluting than they are. The EPA initially discovered that 482,000 VW diesel cars were producing emissions of up to 40 times the level permitted in the US. VW later admitted that the global figure was 11 million cars.

In December Volkswagen admitted that the cheat device installed on these cars was the result of a collection of failures throughout the organisation, not the actions of rogue engineers as had previously been suggested. VW initially estimated the ‘economic risks’ of the scandal as £1.45 billion.

Read the full examination of the emissions scandal, ‘Exposed to scrutiny’.

November

Athletics

In November, the World Anti-Doping Agency (Wada) conducted an independent investigation into doping and published a report which accused Russian athletics of creating a culture of doping. It pointed the finger at all those involved in the sport, particularly the coaches. National team coaches were accused of ‘the trafficking of prohibited substances’ and their actions created an ‘embedded and institutionalised process designed to secure winning at any cost’. Wada recommended that four senior coaches should receive lifetime bans, alongside the head of the All-Russia Athletics Federation’s (ARAF) medical commission.

ICSA’s Policy and Research Director, Peter Swabey examines whether governance is the solution in, ‘The real cost of doping’ and Rowland Jack looks at the anti-doping process in 'Winning the Battle'.

Henry Ker is Deputy Editor of 'Governance and Compliance'.

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