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Ronald Noble, RKN Global’s founder, on Corruption’s Finding Opportunity: Sports and Referees

We have previously discussed that corruption abhors a vacuum, and whenever there is an organizational or institutional structure, gaps and opportunities in that structure will be exploited for corrupt purposes if the costs do not outweigh the benefits for the perpetrators.  In the realm of sport, we have examined how tennis, which as a one-on-one sport (at least in singles tennis) allows one player a great deal of power to alter the outcome of the game, presents extra opportunities for corruption because the game is simpler to fix.

RKN Global’s founder Ronald Noble draws attention to the fact that while not all sports share the small player-count of tennis, some nevertheless put a great deal of power over the course of the game into the hands of one person with a different role: the referee.

While there have certainly been more recent examples, a case of referee corruption from a few years ago still illustrates so well how the combination of a referee’s opportunity and base human instincts can combine to bring about corruption.  In 2013, a Singaporean match-fixer named Ding Si Yang reached out to a Lebanese referee named Ali Sabbagh, who, along with two colleagues, was in Singapore to officiate at an April 3rd Asian Football Confederation soccer game.  Ding reached out to Sabbagh and his friends, setting them up with prostitutes as a bribe to incentivize them to fix the April 3rd game.

A famous basketball case also shows the power of a referee and how that power provides a tantalizing bait for those who might succumb to corruption.  Tim Donaghy was a successful basketball referee, having moved up the chain from refereeing college games to the NBA, where he officiated at almost 800 games over the course of thirteen years. 

In Donaghy’s case, gambling and its addictive properties provided the impetus for him to corruptly abuse the power he held over the sport. For two seasons, Donaghy placed bets on games at which he officiated.  While he denied to authorities that such betting—which is a clear conflict of interest—affected the objectivity of his performance as a referee, any outside observer would have trouble believing this to be true:  Donaghy’s successful bets attracted the attention of professional gamblers, who shadowed his bets and made an unusually large windfall.

Those inclined to believe Donaghy’s claim that he did not fall victim to corruption might claim that the inside information with which he was armed, including information about the starting lineups of the games, player injuries, and team morale, was sufficient to enable him to bet correctly without actually corrupting the outcome of the game himself.   Needless to say, this is hard to believe.  But even if it were true, making bets based on inside information is itself corrupt.

Ronald K. Noble, founder of RKN Global, qualifies that structural weaknesses such as a referee’s tremendous power over the outcome of a game do not necessarily constitute the motivation that drives a referee to become corrupt and fix a match. Instead, it provides the opportunity for corruption when the motivation—be it bribery with sexual favors, a gambling addiction, or some other incentive—manifests itself.

The awareness of structural weaknesses as a magnetic opportunity for corruption in sports—and indeed, in all areas—provides law enforcement as well as private organizations with a guide to where to focus their limited resources and attention when it comes to anti-corruption prevention and enforcement efforts.

Ronald Noble, Founder of RKN Global, on Corruption in Sports and Why Some Sports are More Susceptible than Others

Spanish authorities’ recent arrest of thirty-four people for match-fixing in connection with tennis matches in Spain and Portugal illustrates one of the qualities that makes sports so ripe for corruption in certain sports:  The ease with which it can be done.

RKN Global’s founder, Ronald K. Noble, explains that tennis is especially attractive to corruption by match-fixers because often, only one person needs to be corrupted in order to successfully fix a match.  While it is true that match-fixing is rife in many team sports, it is more difficult to pull off, as results cannot be guaranteed without involving a number of participants in the fix.

Those arrested were accused of fixing games in at least 17 different competitions, earning over €500,000 in total.  The price offered to players to throw a match was between €500 and €1000, though the players were often not paid what they were promised. 

The recent arrests include six players, none of whom were among the top-ranked players of the sport.  In fact, all of the players ranked below the top 800 players in the world.

Ronald Noble, RKN Global’s founder, points out that this case illustrates how corruptors need not target high-level matches and players in order for it to be profitable to fix matches.  While high-level players are not immune to corruption, it is difficult to bribe them so inexpensively.  Additionally, high-level matches are often the object of intense attention by millions of fans, and scrutiny by critics, officials and law-enforcement.   Suspicious activity, both in the betting markets and on the court, is easier to spot with so many observers, and therefore must be pulled off with much more finesse.

By contrast, lower level matches that do not draw any significant public interest are still profitable for match-fixers, as gamblers bet on matches at all levels, yet they do not present the high-stakes drawbacks and dangers that come with the highest levels of the sport.

These recent arrests, including of six relatively unknown players, in a match-fixing ring thus sheds light on two important facets of corruption in sports:  The attractiveness of sports like tennis, where one person controls a great deal of the play in the game, and the benefits of staying off the radar and targeting lower-level teams and competitions.

These arrests also show that authorities are becoming aware of these phenomenon and are turning increased attention to the range of players, participants and matches susceptible to the corruption of match-fixing.

Ronald Noble, RKN Global’s Founder, on the Stubbornness of Corruption

One of the central themes in intelligent crime prevention efforts is an awareness that nature abhors a vacuum.  In the criminal context, this means that criminals will take advantage of any opportunity for corruption that arises within a social, legal or communal structure.

Ronald Noble, RKN Global’s founder, highlights that this phenomenon applies in any context where people can gain an advantage through corruption or crime, whether it be in private life, in government, or in business. Anti-corruption efforts must be aimed at eliminating the structural incentives for corruption.  While this cannot be done completely, progress can be made.

The battle against corruption is no easy task, however, as borne out by a recent, historic attempt to do so in India.  India was facing a vast underground cash economy, with enormous amounts of untaxed money hoarded by criminals and used for criminal activity. The non-transparency of this underground economy encouraged further corruption such as bribery, counterfeiting, organized crime and terrorist financing.

The Indian people were treated to a historically unprecedented surprise on November 8th, when the Prime Minister, Narendra Modi, delivered the surprise announcement that larger denomination notes—of 500 and 1,000 rupees–would become worthless within a few days.  Indians would be able, theoretically, to redeem them for new currency notes.

The idea was to force criminals who had hoarded their wealth in undeclared cash to either deposit it and declare it to authorities, or to be left with worthless paper.

However, the plan had to be kept secret before the Prime Minister’s announcement, so that the wealthy and the corrupt could not invest in gold and other hidden assets in advance of the devaluation.  As a result, significant printing of the new currency notes did not start in earnest until after Modi’s announcement, and India faced a cash shortage.

Desperation followed, with many Indians not having access to enough money to pay for basic bills and necessities like groceries.  Some of those targeted by the demonetization, however—like criminals who had hoarded illegal or undeclared funds—discovered that opportunity awaited to take advantage of the very situation that was designed to root out corruption.

Indian news has reported a number of seizures of large stashes of the new highest currency, in the amount of hundreds of millions of rupees.  The money became available specifically to criminals because they took advantage of the opportunity offered by the scarcity—to bribe politicians to trade in their large quantities of old, devalued notes for new ones.  In exchange for this money laundering, officials took a hefty bribe of 30 to 40 percent of the total.  Bank employees both high and low have also been accused of engaging in corrupt money laundering schemes to enrich themselves, but ultimately enabling the reestablishment of the underground criminal economy.

Ronald K. Noble, RKN Global’s founder, uses India’s experience as a cautionary tale in the battle against corruption.  Criminals will always respond to the battle against corruption by finding ways keep their ill-gotten gains. Therefore, attempts to take away their illegal assets must be accompanied by efforts to thwart and expose the bribery and other illegal means that they use to avoid the anti-corruption efforts. India’s Prime Minister, Narendra Modi, must be credited for having taken such a bold step with breathtaking speed.  Admittedly, there have been unintended negative consequences for many, including the poor.  But in the long run, with diligent law enforcement and further anti-corruption efforts, the entire country, especially the poor, will reap the long-term benefits of this courageous anti-corruption initiative.

The story of India’s currency devaluation is not yet done, however.  With diligent law enforcement and further anti-corruption efforts, the obstacles and difficulties may still be overcome.

Ronald Noble, RKN Global Founder, on Systematic Corruption

Ronald Noble, Founder of RKN Global, discusses the importance of systemic corruption in encouraging further corruption.

Over the course of almost three decades in national and international law enforcement, including 14 years at the helm of INTERPOL as its Secretary General, I became extremely familiar with many of the patterns, factors and influences relating to different types of corruption and crime. 

One of those factors I discussed in a previous article on corruption in government:

“One of the factors that makes it more likely for people to engage in corruption is a pre-existing culture of corruption.  If the situation in a particular company, institution or government has gotten so bad that bribery, extortion and other types of corruption become commonplace, then it is even easier for others to participate in acts of corruption.”

A New York Times opinion piece the day after my article makes a similar argument after surveying the slew of corruption allegations and scandals that seem to have swept over countries throughout the world, from the impeachment last Friday of President Park Guen-hye of South Korea over her connections to a back-room adviser involved in extorting money from conglomerates, to the impeachment of Brazil’s president in August and the arrest of two governors, to the collapse of the Guatemalan government’s collapse over bribery allegations involving the President and Vice President, and to corruption officials against Argentina’s former President.

The article examines the theories of Professor Raymond Fisman of Boston University, who focuses on the study of systemic corruption.  Fisman supports my argument that systemic corruption makes further corruption more likely.  He argues that corruption is best understood in light of a social and economic equilibrium in a particular system, whether it be a sporting team, government, or company.  When the equilibrium is such that there is not a lot of corruption, then someone doing something corrupt—extorting another, or soliciting a bribe—then the act of corruption is dangerous, because the corruptor might be reported and get in trouble.

On the other hand, Fisman notes, “if everyone around you is paying bribes, the cost-benefit tradeoff flips. . . As more and more people engage in corruption, you’re better able to find willing partners in crime.  And the benefits of staying honest decline” because everybody is engaging in corruption, and you can’t get ahead without joining in.

Fisman suggests, as I did, that the fact that independent actors within the system—“islands of honesty” like prosecutors or courts– are willing to challenge corruption is a good thing, and offers hope of turning the system around.

RKN Global founder Ronald K. Noble blogs about and analyzes corruption at rknglobal.info.

Ronald Noble, RKN Global Founder, on Political Corruption in Brazil

The year 2016 has seen the President of Brazil, Dilma Rousseff, removed from office over charges of corruption, the politician who headed her ouster, Eduardo Cunha, jailed on corruption charges, and two former governors of the province of Rio de Janeiro (within which the city of Rio de Janeiro is located), Anthony Garotinho and Sergio Cabral, arrested for voter fraud and corruption, respectively. 

Now, as the new President of Brazil, Michel Temer, faces allegations of corruption, a member of his government has just been removed from his position as president of the Senate because of his indictment for corruption, specifically on embezzlement charges.

Ronald Noble, RKN Global’s founder, notes that one of the factors that makes it more likely for people to engage in corruption is a pre-existing culture of corruption.  If the situation in a particular company, institution or government has gotten so bad that bribery, extortion and other types of corruption become commonplace, then it is even easier for others to participate in acts of corruption.

The most recent manifestation of the growing scandal of corruption in the highest echelons of Brazil’s government relates to Renan Calheiros, a member of Brazil’s Senate who was removed from his post as head of the Senate by order of a justice of Brazil’s Supreme Court.

The judge ordered Mr. Calheiros removed from his position because the president of the Senate is in the line of succession for the Presidency, because Mr. Calheiros is being indicted for an embezzlement scheme, and because no one in line of succession for the presidency can be a person who is under indictment for corruption.

Specifically, the indictment against Mr. Calheiros harkens back to 2007, alleging that he arranged for the use of Senate funds to pay child support for a daughter that he had from an extramarital affair.  In particular, the payments were made by a construction company, which then billed the Senate for the payments, thus constituting the embezzlement of public funds.

In addition, Calheiros is the subject of eleven corruption investigations.

RKN Global’s founder Ronald Noble acknowledges that it is difficult to clean up an institution or government that is systemically rife with corruption, but nevertheless it is possible.  The fact that a government investigates and brings to justice those in positions of power is itself a positive sign for the country’s democracy and a sign of hope for the possibility of change.

RKN Global on Conflict of Interest and its Role in Corruption

A British football manager was given a three year suspension from the sport by the sport’s national governing authority, the Football Association, after he admitted to betting against his own team.  His case highlights an important factor in corruption in general, and in sports corruption in particular:  The role of the conflict of interest.

The manager of Frome Town football team admitted to charges that he placed bets against both Frome Town and his former team Paulton Rovers, yielding himself a £1,924.29 profit.

RKN Global’s founder, Ronald Noble, warns that corruption is largely a function of opportunity.  Human nature is such that many people will engage in corrupt activity if the opportunity arises.  One of the keys to combatting it, then, is to keep people far away from the situations in which corruption is more likely.  Conflicts of interest are a major example of such a situation.

Conflicts of interest lead to corruption because it creates an incentive that runs against the obligation of the person with the conflict.  In the instant case, for example, a team manager’s job is to do everything he can, within the rules, to help his team win.  If he bets against his team and stands to make money if they lose, then he now has an incentive for them to lose, a reason to not fulfill his obligation to try and help them win, and even a reason to sabotage them so that they lose.

For this reason, the official rules of football (soccer), along with other sports, forbid betting against one’s own team by anyone involved, including players, managers, and coaches.  Many sports, like football, have additional bans that extend further to prohibiting betting on the sport by those involved in the sport.  Even the appearance of corruption can damage the sport, eroding public confidence.

Ronald K. Noble, founder of RKN Global, notes that the rules prohibiting conflicts of interest are essential precisely because they are designed to keep people out of situations where they will more easily succumb to corruption.

The Frome Town manager claims that he did not engage in match-fixing or do anything to try to get his teams to lose, but rather used information—like knowledge about which players were injured or unavailable for the specific games—to help him guide his betting.  The Football Association believed that he did not actually engage in the corruption of match-fixing, and sentenced him to three years’ suspension.

It is certainly possible for someone to act properly even with a conflict of interest, much as it is possible that a child puts his hands in the cookie jar just to examine the cookies, and not to eat any.  But it is not so in the majority of cases.   Prohibitions on conflicts of interest are important elements in the battle against corruption.

Ronald Noble, founder of RKN Global, draws attention to the fact that conflicts of interest are certainly not relegated to sport, and can be found in almost any field of human endeavor, including government and business.