A New Era of Transparency in Brazilian Sports? The Pact for the Sport Initiative By Sponsors

During the last decade Brazil has had the chance to host two of the most relevant sports competitions in the world (from a Brazilian perspective, certainly the two most important competitions): the FIFA World Cup 2014 and the Rio de Janeiro Summer Olympics 2016.

The excitement of the opportunity of showing the face of a developing country to the world came along with the fear that the size of the commitments made by both the organizing committees (and ultimately the Brazilian government) would be too much for a country still struggling with economic inequality.

The fear stemmed from the fact that the necessary investments in logistics (specially for the World Cup and its twelve hosting cities1) and sports facilities would be detrimental to other necessary investments that the Brazilian government should prioritize (such as the construction of hospitals and schools, and investments in sanitation and public security).

An added pressure was that the so-called “Brazilian-way” of doing things might be on display for the world which could lead to various issues such as unfinished constructions and corruption3.

From a public-opinion perspective, both the events were very successful. The hospitable Brazilian people enchanted the foreign tourists with their passion and enthusiasm for football (with a little help from the music, the parties and the ‘caipirinhas’!). Not to mention the amazingly beautiful city of Rio de Janeiro, which in the 2016 Summer Olympics gave the world an ending fitting for the impression Brazilians wanted to share with the world.

Ironically, though, the general distrust and great protests which preceded the organization of those events paved the way for the approval of two important pieces of legislation which would later be of great use:

1. in August 2013 Law 12,846 was enacted to provide the civil and administrative liability of legal entities for the practice of acts against the public administration, both national and foreigner, setting therefore the grounds for legal entities to be responsible for the acts of corruption of their officers4; and,

2. in October 2013, article 18-A of Law 9,615/1998 (the so-called Pelé Law, which broadly disciplines the functioning and structuring of sports entities in Brazil) was introduced to impose governance and transparency rules for sports entities which receive public financing.5

However, time has showed that people were right when protesting the events based on their fear of corruption and waste of public resources. Concurrently to the two events, an unprecedented political scandal outburst arising from the so-called Car-Wash Operation (see footnote 6 for more information).6 Corruption schemes were revealed involving public officers from municipal to federal levels and several contracts related to the World Cup and the Rio de Janeiro Olympics following the arrest of senior officers and controlling shareholders of most of the biggest contractors operating in the country. To read more information on Operation Car Wash and reform of the COB (Brazilian Olympic Committee), please see this article on LawInSport by Roberto de Palma Barracco.

Corruption – both related and unrelated to the two events – of senior officers of at least the two major Brazilian sports entities, CBF (Brazilian Football Federation) and COB, was also revealed and resulted in their arrests and/or removal of their duties.7

The public backlash with the involvement of their brands with entities involved in scandals made some of the most important sponsors of the Brazilian sport realize that it was time for them to act towards fostering a better environment for the adoption of good governance and transparency practices by the Brazilian sports entities.

This formed the ideal environment for the creation of the Pacto pelo Esporte (in a literal translation, Pact for the Sport), an unprecedented reunion of thirty-seven of the major sponsors of the national sport who joined forces with two reputable non-for-profit organizations:

1. Atletas pelo Brasil – which has played a major role in the drafting of the bill that resulted in article 18-A of the Pele Law, and congregates sixty-three of the most awarded Brazilian athletes and para-athletes of all times with the purposes of promoting the sport as an instrument for human and social development; and,

2. Instituto Ethos – whose purpose is to mobilize and assist companies to manage their businesses in a socially responsible way, as to help promote a more just and sustainable society.

The purpose of Pacto pelo Esporte is promoting ethical conditions for sponsorships and contributing to the definition of clear rules, besides mechanisms to promote the integrity, transparency and efficient and responsible management of resources applied in administrative entities and for the national practice of sports.

They aim to do that by using two very interesting and unique tools:

1. a voluntary commitment to only sponsor entities that comply with certain minimum rules of governance and transparency (and to make sure that their sponsored entities obey by those rules); and

2. the creation of a platform called Rating Integra to rate the sports entities in their performance of governance and transparency rules, so that to have clear metrics for the members of the Pacto pelo Esporte to define those entities that can and cannot be sponsored.

In the next items we will further analyze each of these tools and how they intend to create the incentives for the Brazilian sports entities to adopt good models of corporate governance and transparency.

For an English translation of the Pact, please see at the end of the article.

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