The past decade has witnessed an enhanced push towards giving the sports sector its due recognition. With the launch of numerous leagues, coupled with the success of our athletes in international events, the sports sector has witnessed sizeable investments from the public and private sectors. Unlike the corporate sector, the sports sector is yet to acknowledge the benefits of the application of governance. It is tough to ascertain the exact reasons for such a paradox.

Corporate entities are now expected to have a robust governance structure. An experienced and qualified finance team led by a chartered accountant as the CFO; a robust internal audit function; an independent director as part of the board; an effective and independently managed whistle-blowing mechanism; well-drafted policies, and procedures relating to code of conduct, travel reimbursements, performance evaluation; appointment of a statutory audit firm commensurate with its size and scale, are all considered to be basic foundational elements. Not many entities in the business of sports can boast having two or more of the aforementioned industry-wide accepted best practices. Although some sports bodies have an anti-corruption policy for athletes, they do not have a policy or guidance on similar lines for those charged with governance.

Key challenges

According to the ‘Global Report on Corruption in Sport’, by the United Nations Office on Drugs and Crime (UNODC), with the evolution in the sports industry, the type of corruption that affects it and its scale has grown. Per the report, the two key challenges for the timely detection and reporting of corruption in the sports sector are (i) the ability of governments and sports organisations to detect corruption due to lack of human/technological resources and specialist skills; and (ii) potential whistle-blowers discouraged from reporting corruption due to the fear of retaliation or the belief that reporting will not make a difference.

The report also highlights the lack of transparency in awarding hosting rights, inequality in pay for women athletes, lack of representation of women in governance, illegal betting, etc. In addition, the sports sector in India faces challenges related to nepotism, lack of understanding around what constitutes as a conflict of interest, ticket distribution-related fiascos, counterfeit merchandise, etc.

A couple of sports federations underwent forensic audits in the past year. Many State sports bodies have now moved to reputed internal auditors/statutory auditors and are considering the use of technology to make their internal controls more effective. The UNODC report states that sports bodies may consider the following responses to curb corruption: (i) develop comprehensive policies based on an assessment of the corruption risks faced, including those related to the organisation of major sports events, competition manipulation and illegal betting, and which negatively affect children, young athletes, and other vulnerable groups; and (ii) establish a body or bodies that have responsibility for the prevention, detection, investigation, and sanctioning of corruption in sport, and ensuring they can function effectively.

The common perception of lack of funds available with sports federations may not exactly be the only challenge towards implementing better governance. Barring a few sports federations, the direction and vision of those charged with governance need to catch up with modern corporate governance standards. With the success of our athletes, governance-related matters have started getting due attention — a sign of positive changes to come.

The writer is Partner, Forensic, Financial Advisory, Deloitte India