Why are events prone to corruption?
The event sector is project based. Unlike sport, for example, it does not have centralised administration, such as FIFA, to create the governance rules. The event associations are not able to enforce codes of conduct, except by expelling members. It is really a free for all type of industry. This is its attraction and source of its creativity. It is also its attraction for corrupt conduct.
There are various studies on the size of the event sector. But none of them are satisfactory for a world wide view. Different types of events crop up all the time. Too often an assessment of the size and scope of the sector leaves out one part. Weddings, for example. An important event in many people’s lives, worth billions of dollars around the world and yet not really covered by the general textbooks on events. Religious celebrations and commemoration are not front of mind when thinking about the event sector. Tourism events receive plenty of press and with business events, such as conferences, and exhibitions are in the forefront of the minds of the innumerable visitor bureaus and the subject of economic impact studies around the world. Almost every sector from agricultural to finance has events such as conferences, exhibitions, seminars, festivals and concerts. This variety and spread is part of the attraction to the corrupt.
The millions of dollars involved in even the simplest event is enough to attract the criminal. A concert of 20,000 people is easily worth a minimum of two million dollars. Simply worked out by the ticket price multiplied by the number of attendees. But this does not take into account the merchandise, food and beverage and sponsorship. On site there may be over a million dollars spent. When this was purely cash, the opportunities for criminal and corrupt behaviour were endless. With the credit cards, it has changed dramatically. Not extinguished, just moved into other areas of corruption.
Events are found around the world. Hence one form of corruption, such as money laundering, can take advantage of the cross border and touring events. There are a variety of opportunities for corrupt practices as the funds come and go from a number of sources. Merchandise, sponsorship, ticket sales, sale of assets, payment of suppliers, royalties and grants all make up this dynamic movement of money. It was more than the money that was dynamic, each event had a cluster of different suppliers. Even the regular supplier often had changed their staff from the last time they were contracted. The suppliers come and go, get bought out and go bankrupt. The stability needed for the prevention of corruption described in the UN and EU documents is just not found in many events.
The staff for event management, the planning and the event itself, can go from a few people to thousands. Recruitment is fast tracked and often the event will depend on volunteers. The recommendations in anti corruption documents must be adapted to the ‘pulsating’ human resources. Many events such as public festivals are organised by non profit entities often with a mixture of community groups and volunteers. These non- professionals have to negotiate and work with private companies with a strictly financial approach to the event. The number of stakeholders such as suppliers, can create a mind boggling complexity of quick decisions with unexpected and uncertain outcomes. A seemingly small change in the logistics can have an overwhelming result. Hence a “small bit” of corruption to facilitate the flow of goods and services may seem a solution.
It is the same with the local procedures, rules and regulations. They have been developed for ongoing governance and administration. It is well-nigh impossible to delay an event. It is time critical project management with a fixed deadline. A touring event has to face a myriad of new rules and regulations in each jurisdiction. A trade exhibition and promotion in Vladivostok faces completely different legal and cultural values to one in Chandigarh to one in Houston. ( the author was involved in all of these).
It should be stressed that the event, such as a concert or festival, is where the value is created. If the event is cancelled i.e. does not go ahead, then the work leading up to the events becomes a cost. Hence every aspect of the lead up to the event is evaluated with this in mind. In simple project management terms, the decisions are always: time /cost/quality. But the time for the event is its deadline. Hence any prevention of corruption strategy must be highly efficient. For events that are special or one off, there is no time for correction. By this I mean a yearly event such as a local festival can incrementally correct itself each year. Their anti-corruption policy can improve. It can be tested and refined. Other events such as special events and touring events must have preventive policies that will work immediately. This is little or no time for correction and improvement.
It is similar to the situation in sports as pointed out by the UN Global Compact Working Group Fighting Corruption in Sport Sponsorship and Hospitality
“Awareness of time-crunch snap decisions made for provision of products and services when an impending Sport Entity event deadline creates circumstances for business process safeguards (e.g., proper RFPs, due diligence background checks, conflicts of interests, contractual provisions) to be circumvented”
UN Global Compact Working Group, (2014) Fighting Corruption in Sport Sponsorship and Hospitality: A practical guide for companies, fighting_corruption_in_sport_sponsorship_and_hospitality.pdf
A further risk the touring event has to face is the different cultures and attitudes to corruption. There are places where giving a service provider a personal reward is regarded as the only way to do business. The distinction between government and the law is not the same as that found in UK, Europe or the USA. Only the UK has the Magna Carta. In other countries it is not as clear. The practice of tipping in the USA is an example. In other cultures ensuring your extended family members have a job is an important responsibility. Hence nepotism is not regarded with the same aversion around the world.
Lastly, once the event has finished, it is difficult to trace and prove any past corruption. The event team and suppliers have dispersed, the event site cleaned and back to normal. Often they have moved on to different countries. There were so many decisions and last minute changes that tracking these is almost impossible. The cost can be prohibitive.
The above section describes why the creating, developing and managing an event, be it a festival, celebration, product launch, concert or any other, does not directly fit with the various preventative measures outlined and described in the UN and other excellent documents and websites. The core is that event management is dynamic, responding to changes and developments, often with a myriad of stakeholders and sponsors in a new area or site. All of this culminates in a few hours, a day or maybe three days of value creation. It then effectively disappears.
This dynamism as will be seen over the various chapters also attracts corruption. Unfortunately, we can never really know the extent of it as, by its very nature, corruption is hidden.
The netherworld
It goes without saying that exposed corruption is only an indicator of the extent of corruption. There are too many interests to expose its spread and depth.
The information that is collected is recognised as only the ‘tip of the iceberg’. But with an iceberg at least you can look under the water to see its size. It is impossible with corruption. The court cases in and out of the event domain, such as Bernie Madoff and Bankman-Fried may indicate its spread and depth in just the finance sector. Again with corruption in customs and immigration, only the people caught will indicate its breadth and depth. Keep in mind that events cross all these sectors. It is the nature of these criminal actions that they are hidden. Petty crime such as small bribes will never be admitted and difficult to discover. There is no database.
Once people are compromised, they are open to extortion. A person’s exposure can then be traded. As Beria supposedly said “Show me the man and I’ll find the crime”. This is not data that can simply be collected, collated, and analysed. It is hidden, it is the netherworld. We all know it is there. It forms the basis of stories, plays, films and novels. Look no further than Shakespeare, John Huston, Orson Welles, Martin Scorsese, Akira Kurosawa and John Steinbeck. No amount of hypothesis and testing will uncover it all. No amount of in depth questioning or polling will find it. The border official who pockets the $100 note is not going to talk about it to a pollster.