Bone-headed Moves on the Football Field and Idiotic Statements About Corruption

Thomas Fox - Compliance Evangelist
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Pete CarrollThree things can happen when you throw the football, and two of them are bad.”

That football truism (allegedly) came from former Texas Longhorn head coach Darrell Royal. While he intoned it in a different era, Pete Carroll and his Seattle Seahawks proved it still to be valid in the most recent Super Bowl, Carroll called for a pass play on the one-yard line in the last minute of the game and his quarterback threw an interception. Was it the most idiotic call in Super Bowl history? I will leave that answer to the pundits but I will say that Carroll now has the ignominy of making two of the most bone-headed decisions of all-time in football, one in the Super Bowl and the second in College Football’s 2005 National Championship Game, which cost his team the game. Perhaps not what you might want as your epitaph.

For those of you who may have forgotten Carroll’s NCAA National Championship Game FUBAR, his team, the University of Southern California, needing to make one yard at the University of Texas (UT) 43 yard line to achieve a first down and ice the game, Carroll called a running play after pulling off the field that year’s Heisman Trophy winner Reggie Bush. That left one running back on the field and everyone on the field, everyone in the stands and watching the game knew the remaining running back, Lendale White, would get the ball. He did and was promptly stuffed by the UT defense. Vince Young then led UT down the field, scored and Texas won the National Championship. As a UT alum all I can say is, thanks Pete.

I thought about Carroll and his making not one but two idiotic calls for the ages as I have been studying the ongoing Petrobras bribery scandal. While the GlaxoSmithKline PLC (GSK) corruption enforcement action in China may well presage a new era of countries enforcing their local anti-bribery and anti-corruption laws, the Petrobras case may herald this too. The scandal came to the attention of many American’s in the fall of 2014 during Brazil’s Presidential election in a New York Times (NYT) article, entitled “Scandal Over Brazilian Oil Company Adds Turmoil to the Presidential Race, where Simon Romero detailed the bribery scandal involving a former official of Petrobras, the Brazilian national oil company, named Paulo Roberto Costa. Mr. Costa was the person who oversaw the company’s refining operations. He has admitted to having engaged in the receipt of bribes for at least a 10 year period “equivalent to 3 percent of the value of the deals from the Brazilian construction companies that obtained the contracts” to build refineries. This amounted to literally millions being “stashed in bank accounts in Switzerland and the Cayman Islands.”

Costa who “was first arrested in March as part of a money laundering investigation by the federal police, has already agreed to surrender the $25 million fortune he hid in offshore accounts, his yacht and his luxury car, in addition to paying a fine of more than $2 million.” He “inflated budgets for new projects” by 3% and then had that amount kicked back to him as bribes. The allegations were verified “through an associate, Alberto Youssef, a black-market money dealer who testified that he helped launder funds in the scheme. Mr. Youssef, who has also accepted a plea deal, testified that more than a dozen of Brazil’s largest construction companies had paid hefty bribes to obtain lucrative Petrobras contracts.”

Further “He testified that a portion of the money was then handed to João Vaccari Neto, the treasurer of the Workers Party. Mr. Costa said that other top political allies of President Rousseff, including the leaders of both houses of Congress, Henrique Eduardo Alves and Renan Calheiros, also benefited from the kickbacks, according to a report by Veja, a Brazilian magazine.” Interestingly, President Rousseff “has also effectively acknowledged the prevalence of corruption inside the executive suites of Petrobras, while denying that she had known about the kickbacks when they were taking place.”

To say things have mushroomed would be almost likely citing Darrell Royal on passing the football to Carroll. Petrobras is in many ways the engine that drives the Brazilian economy. Not only is it directly responsible for the employ of upwards of 80,000 employees. It is also the continent’s largest company by market capitalization so the amount of work that it generates for the Brazilian economy is staggering.

Just as staggering is this bribery scheme in which it finds itself now engulfed. According to an article by Luciana Maglahaes and Rogerio Jelmayer in the Wall Street Journal (WSJ), entitled “Petrobras Ex-CEO Weighs In”, the company has “lost $80 billion, or 65% of its market share over the past five months.” The company has publicly said that it cannot estimate the amount of money it lost or was overcharged by. The WSJ article noted, “Prosecutors estimate that around $732 million may have been skimmed. But former Petrobras Chief Executive Maria das Graças Silva Foster, who resigned under pressure last week, said projects tied to the alleged scheme may be overvalued by as much as $31 billion.” Think about that number $31 billion in overcharges to the company.

So, how does Carroll and his bone-headed passing call work into this story? First of all it was not Carroll who made the call but the team’s Offensive Coordinator. Yet he did so because Carroll told him to call a passing play. In other words, idiotic tone at the top reigned and the employee base simply followed the boss’s wishes.

In the Petrobras corruption scandal, we were treated to remarks by José Sergio Gabrielli, the former Chief Executive Officer (CEO) of the company from 2005 to 2012. This was also one of the company’s most successful periods of financial growth. The former CEO has claimed not to know anything about any corruption issues that may have arisen during his tenure. Moreover, “Mr. Gabrielli said the alleged fraud was the work of a few bad apples inside the company, and not an indication of broader problems with corporate governance or internal controls at Petrobras.” He then added that the business generated by the company surely outweighed any nefarious effects by stating “Even if the numbers are huge…how much has Petrobras invested from 2003 to 2014? Probably it invested an average of $30 billion a year.” He also added it was really all much ado about nothing by noting that the press had blown the “scandal out of proportion”.

So there you have it encapsulated in three lines; the clearest articulation of a defense of bribery and corruption that I have recently seen. First it was the oldie but goodie rogue employee defense. (I mean there were 80,000 plus employees, how could you stop all of them from engaging in illegal conduct.) Second, look at all the money we made, so even if the corruption cost us $31bn we averaged that much per year while he was at the helm. Finally, it is really no big deal anyway and is all “blown out of proportion.”

Is it really any wonder Petrobras now finds itself in one of the world’s largest corruption scandals? If that is the attitude of the former CEO, do you think he communicated this laissez-faire attitude to his direct reports and that perhaps it cascaded down the organization? As to Carroll, if he gets back to a championship game, either in professional or college football, he might want to consider his play calling. As for the former CEO of Petrobras, Brazilian prosecutors are fighting to freeze his assets and his major complaint is that he has to deal with too many lawyers. Enough said.

 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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