Background
Last week the CEO of Sport Australia (formerly the Australian Sports Commission), Kate Palmer, wrote to the state member federations and A-League clubs outlining Sport Australia’s concerns with some of the recommendations of the Congress Review Working Group (CRWG) on the FFA Congress. The latest letter was eight days after an email from Sport Australia, which came 30 days after the CRWG’s report was released.
Sport Australia’s intervention has attracted attention because of its timing and its precedent.
In relation to timing, Sport Australia did not intervene until after Steven Lowy’s threatened ‘non-resignation’, FFA’s formal response to the CRWG report was made public, and the motions of the extraordinary general meeting were made available. In light of the FFA Board, and particularly the Lowy family’s, close links with government and with the Chairman and other members of the Sport Australia Board, this raises a governance issue of its own.
In respect of precedent, it is highly unusual, given the stakes involved and its timing, for a government agency to intervene so publicly and, in doing so, come between a process designed and overseen by FIFA with the full agreement of all stakeholders, including FFA, without the knowledge of the Minister or the Minister’s office. It is so unlikely that it is possible it would not have been done if it had either not been initiated by the Minister’s office or at least with the approval of the Minister’s office.
Now let’s turn to the content of Sport Australia’s letter.
FFA independence
Sport Australia writes that the views expressed are not by way of ‘political interference’ (and thus in contravention of Article 15(c ) of FIFA Statutes) but as a “major investor in football in Australia.”
Sport Australia has a “responsibility to the Australian public to ensure that sporting organisations receiving taxpayer funding comply with contemporary best practice governance standards. Over the past five years FFA has received $17.6 million from Sport Australia.”
The ‘investment’ is actually understated. According to the busted flush Smith Review that the then government set up in 2013 to investigate the financial sustainability of football, football had received “more than $150 million” from the federal government since 2004. Amongst other things, this included:
$16 million for high performance and participation payments (the regular payments made by Sport Australia to sports)
$57 million in special assistance
$7 million for Asian Cup preparation, and
$45 million for the 2018/2022 World Cup bid.
Subsequent to the Smith Review, football also received $61 million for the staging of the Asian Cup (which, by the majority of economic assessments, was returned by way of contribution to GDP).
It is appropriate for government to be concerned about the use of taxpayers’ money – that is their job, after all – but Sport Australia’s public intervention in football on this basis now is curious, at best.
Where was Sport Australia when issues were raised about the folly of spending $45 million on a World Cup bid which included an enormous reputational risk to Australia (subsequently proven) by the engagement of three international consultants who scooped up $15 million between them, and in a contest we were never going to win? Not only that, FFA was told by FIFA it would not win the vote 18 months beforehand when money could have, and should have, been returned to the taxpayer.
Why hasn’t Sport Australia ever expressed a view about the fact that USD$500,000 of money from one of FFA’s bank accounts ended up in the personal bank account of the indicted former FIFA Executive Committee member Jack Warner, just two months out from the 2018/2022 vote?
Why hasn’t Sport Australia ever asked a question about just who was having a conversation with the formerly banned Amadou Diakité of Mali on behalf of the 2018/2022 bid team, about a $4 million payment to African voters? While this money does not appear to have been paid, it is a matter of record at the Court of Arbitration for Sport that it was offered on Australia’s behalf.
Why hasn’t Sport Australia ever asked about the $5 million transferred to FFA, that was originally provided to Football NSW, in order to establish the Western Sydney Wanderers? While the club has been a success for the sport, did they ever inquire whether the license fee paid by the new owner benefited FFA or Football NSW?
Why didn’t Sport Australia ever ask why a consultant to FFA, and a close personal friend of the then Chief Legal Counsel, allegedly receive a reported $1 million+ consultancy fee for the sale of the license of Newcastle Jets to Nathan Tinkler?
Why didn’t Sport Australia raise an objection when the Chairman of the Nominations Committee in 2015, Brian Schwartz, was not only Deputy Chairman of FFA but also of Westfield, then owned by the Lowy’s? This is in direct contravention of Sport Australia’s own governance principles (number 3.6) that “The chair of the nomination committee should be independent from the chair of the board.”
Why didn’t Sport Australia ever ask about how the much-touted search process conducted by Egon Zehnder came up with three names, all of whom had links to the Lowy family, and headed by none other than Chairman Frank’s son, Steven?
Let’s be fair on this point: Steven Lowy may well have been the best candidate for the job. But to this day it beggars belief that, in a nation of 25 million people, the most suitable candidate was the Chairman’s son and the only other potentially suitable candidates had links to the Lowy family. When it comes to ‘good governance’ which Sport Australia say they are concerned with, it fails whatever way you look at it. As I have written previously, it caused raised eyebrows at FIFA HQ in Zurich and, frankly, if an African nation did the same thing, we’d all point-and-giggle and say 'what do you expect?'
So, yes, it’s perfectly appropriate for Sport Australia to have a view on issues within a National Sporting Organisation (NSO) where taxpayers’ money is provided, but to borrow from a favourite line from our (current) Prime Minister – Where the bloody hell have you been?
OR, if Sport Australia has raised all these issues (and there are more) privatelywith FFA and their stakeholders, why go private then and public now?
The CRWG mandate
Sport Australia expresses concern that the recommendations of the CRWG report “go beyond the original scope and intent of its remit”. They write that the recommendations “do not line up with Sport Australia’s view of best practice governance principles”, but no detail is provided as to which recommendations are considered to be extraneous to the CRWG’s task or which are not consistent with best practice governance principles.
Sport Australia’s governance principles can be found here, and are grouped into six categories. They are not so much ‘principles’ but operational guidelines (perhaps that’s a subject for another day).
Congress role in FFA
Sport Australia write that the “ultimate governance model proposed by the CRWG is … flawed” in respect of “best practice governance principles.”
The concern – which is remarkably similar to that of the FFA Board – is that the FFA Congress not only gets to elect the FFA Board (darn democracy and accountability!) but also to nominate members to 17 standing committees to advise the Board. Sport Australia believes this means the Board is “subservient” to its advisory committees, which is inconsistent with the Board’s role under the Corporations Act (darn accountability again!)
Committees reporting to Congress
Sport Australia specifically highlights a concern with the Compliance, Nominations and Ethics committees reporting to the Congress rather than the Board.
In respect of the Compliance and Nominations committees, it seems apparent that the CRWG has recommended that these report to the Congress as the role of those committees is broader than that of the FFA Board which has specific responsibilities in accordance with ASIC requirements only. Sport Australia also cites the Australian Stock Exchange which state that a Nominations committee should report to the Board only. This is appropriate in a for-profit company structure, but less so within a non-profit entity that acts as custodians of a sport which has stakeholders that include a significant grassroots volunteer base of administrators, game day officials, coaches and referees whose only input currently is indirectly via state member federations and/or A-League clubs.
In addition, as stakeholders in a global game, the Congress also has responsibilities to FIFA, the Asian Football Confederation and bodies such as the Court of Arbitration for Sport.
Plus, let’s call a spade a spade. The CRWG's proposals are also responding to there having been no effective capacity to have a say in these areas in the past.
In respect of the Ethics Committee, the CRWG recommends reporting both to the FFA Board and Congress, presumably because an FFA Board member could be the subject of an ethics inquiry.
In any case, the best practice that Sport Australia should be advocating, but are not, is for the Ethics Committee to be truly independent in every sense of the word by way of the secretariat of the Committee being provided externally to FFA, rather than by a FFA staff member.
Number of Committees
The CRWG has recommended 17 committees as set out in the table below.
Committee | Type | Chairmanship | Reports to | Frequency of meeting |
Nominations | Constitutional | FFA Director nominated by FFA Board | FFA Congress | annual |
Women | Constitutional | Independent nominated by Nominations Committee | Everyone | at least 3 times a year |
Compliance | Judicial | External | FFA Congress | biannual |
Disciplinary | Judicial | External | Management | as required |
Appeals | Judicial | External | Management | as required |
Ethics | Judicial | External | FFA Board & FFA Congress | as required |
Finance & Risk | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Competitions | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Stakeholders | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Players | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Referees | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Medical | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Technical & Development | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Grassroots & Community | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Futsal | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Indigenous | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Inclusivity | Standing Committee | FFA Director nominated by FFA Board | FFA Board | at least 3 times a year |
Women's World Cup Bid | Temporary | FFA Director nominated by FFA Board | FFA Board | as required |
On the one hand, Sport Australia state that no other sport has so many advisory committees, including the state member federations; but on the other hand, Sport Australia acknowledges that the number will vary depending on size, complexity and challenges of the sport. Sport Australia also notes that “not all committees need to report directly to the Board”; instead they may report to senior management via the CEO.
They also state that having 17 committees places “a significant administrative burden on resources”, and that “Committees should exist for a specific purpose and not merely because they always have.”
Once again, that is not the case with FFA. One of the issues that has led to this protracted governance battle is the lack of a formal system of stakeholders providing a view or an opinion, let alone advice, to the FFA Board. While David Crawford recommended several standing committees be established in his 2003 report on governance and management of the game, FFA has simply chosen over 15 years to ignore any aspect of the Crawford Report that the FFA Board did not agree with – the establishment of standing committees being one of them.
Putting aside whether 17 committees may be too many, and some may not need to meet three times a year, it is unclear just why Sport Australia views the recommended structure as compromising the FFA Board’s fiduciary duties under the Corporations Act.
Other than the judicial, constitutional and Women’s World Cup bid committees, the committees are advisory in capacity.
They would not compromise the Board’s fiduciary responsibilities under Corporations Law. They do not have any role under the Corporations Act and the FFA Board and/or management may accept or ignore the advice as they see fit. While arguing against the committees, Sport Australia in fact also notes that the Australian Institute of Company Directors states that “Committees make recommendations for action to the full board, which retains collective responsibility for decision making.”
Nonetheless, Sport Australia goes on to say that it “discourages a governance system in which there is both a board and some other body that is able to influence or direct the board.” The example given of “blurred lines between Members’ interests” and the FFA Board’s independence is the second resolution at the 2 October extraordinary general meeting which requires the FFA Board to conduct “a review of the pathway to an alternate A-League Governance model.”
It is unclear why this compromises the FFA Board's independence and it is worth returning to the terms of reference of the CRWG in the first place – terms of reference to which the FFA signed-up to. Amongst other things, the CRWG was clearly required by FIFA, in the context of Article 15(j) to recommend a:
“pathway for an alternative A-League governance model”.
The governance model for the A-League has not been properly reviewed since Crawford in 2003 and the Kemeny report into the operation of a national league in 2004. Both recommended a separate entity for the league, acting under license to the governing body.
On the basis of elapsed time only, and the development of the A-League since its inception, it is timely for the governance model to be reviewed not least as a ‘good governance’ measure – let alone the myriad other reasons why it is required.
‘Ownership’ of the future
It is on the final point that the alignment of Sport Australia’s and the FFA Board’s objections are even more remarkably noticeable.
Sport Australia states:
“Sports should adopt processes that empower national Boards to provide strategic leadership and which allow management to get on with the job of running day to day operations and implement Board directed strategy, but which also respect and preserve the fundamental legal rights of the organisation’s members/owners.”
This is precisely what the problem is with the FFA Congress at this point. A highly empowered national Board has been in charge for 15 years that has disenfranchised and disrespected a large segment of football’s stakeholders drawn from the professional game, the volunteer community, players, fans and others.
While the 'legal rights' of the Members may be intact, Sport Australia might spend their time more effectively finding out exactly why the state of governance and poor relationships has got to this point, especially when weighed against the positive factors of both men’s and women’s participation in World Cup Finals tournaments, both men and women winning the Asian Cup, the hosting of the Asian Cup, the introduction of the FFA Cup, and strong participation levels.
Instead, Sport Australia expresses concern that the new FFA Congress model will allow Members to form a voting bloc which can “diminish trust”. They consider there are too many votes for the ‘professional game’ at the expense of grassroots football which means that decisions of Congress may be the subject of “vagaries or influences of conflicted parties.”
Furthermore, Sport Australia notes that some of the A-League clubs are “internationally owned” and urges FFA Members to consider this when voting.
In saying this, Sport Australia does not acknowledge that the six A-League clubs that are ‘internationally owned’ are here at the express invitation and/or agreement of the FFA Board. In other words, Sport Australia – as with the FFA Board – are happy to have the clubs take part in the A-League, but they don’t want ‘foreigners’ to have any input into how that competition is run.
Sport Australia writes that:
“Processes that give all parties comfort that the reasonable will of the majority and the collective organisation cannot be frustrated by one or two members exercising minority veto powers unreasonably and/or excessively.”
Sport Australia ignores the fact that this has been precisely the situation the FFA Board has relied upon and is continuing to rely upon now by urging between two and four of the smallest state member federations (in total representing 18% of all players) to vote against the CRWG’s recommendations. It is also precisely the same “members exercising minority veto powers” that Sport Australia is appealing to in setting out their objections to the CRWG report.
Finally
It is important to understand the consequences of the vote on 2 October.
If the recommendations are agreed, there will be a need for a transition plan and team that is responsible for implementing the changes, whilst also ensuring that the ‘ordinary business’ of FFA proceeds without a hitch.
At a national level alone, not only is there an A-League season that starts on 19 October, but there are the final stages of the FFA Cup, the Socceroos defence of the Asian Cup in January and the Matildas participation in the Women’s World Cup in June/July.
Transition needs to be measured, steady and staged over a six month period.
If the recommendations are not agreed, FIFA has two options:
1. Install a ‘full’ Normalisation Committee, rather than the ‘Normalisation Lite’ version of the CRWG. This will essentially go through the same exercise as the CRWG with the same organiation and individuals.
Such a committee would be at the direction of FIFA, whereas the chair of the CRWG, Judith Griggs, was not directed by FIFA on a day-to-day basis. In reality also, a ‘Normalisation Heavy’ committee is unlikely to recommend anything much different from the CRWG, and FIFA may take a dim view of having given Australia’s football stakeholders so long to get its ‘house in order’ without an agreed outcome.
2. Suspend FFA from FIFA for continuing non-compliance and inability to meet FIFA statutory requirements. In this instance, it would be until there is a governance model in place that meets the requirements of FIFA (specifically Article 15j) as well as the requirements of the Australian Corporations Act – in effect, what the CRWG has come up with.
Suspension can be imposed temporarily by the FIFA Council and is subject to ratification by the FIFA Congress when it next meets.
Suspension means that Australia would not take part in the Asian Cup, the Women’s World Cup, any international competition, qualifying or friendly matches, would not have any contact with international football entities until the suspension is lifted, or be able to submit a bid to host the 2023 Women’s World Cup.
The issue for the Members when they vote on 2 October is not to react to the scare-mongering about whether a new FFA Congress may “veto key issues” for football, as Sport Australia suggests, but the extent to which they are prepared to be held responsible for throwing away the gains of the past 15 years, as well as the potential of the short term and long term future, by inviting suspension.