Last week’s controversial decision by WADA to reinstate RUSADA - see link - provides a good opportunity to have another look at what industry can learn from sport, particularly around the potential pressures on control functions.

Sport's governance travails are often painful to observe and raw to experience, but they can also throw into stark relief issues that have a much broader relevance.

[For full disclosure, back in the late 1990s, when Craig Reedie, Chair of WADA, was Chair of the British Olympic Association, I was Chair of its Athletes’ Commission and was closely involved in the decision to reaffirm the BOA's lifetime ban of athletes convicted of serious anti-doping offences from representing GB at the Olympics.]

Rather than go into the rights and wrongs of the decision, I want to explore briefly what the saga reveals about sports’ governance and its parallels in wider regulation.

The core of this argument is the universal pervasiveness of conflicts of interest and how dangerous it can be to ignore or underplay them, wilfully or otherwise. Conflicts can be managed effectively, but this rarely happens unless they are acknowledged. And it follows from this that the term “independent”, whether in sport or industry is frequently overused.

WADA was founded in 1999, and is 50/50 funded by the IOC and national governments. The IOC members themselves almost all have strong (often formal) links to National Olympic Committees (NOCs), many of which have close ties to their government, and/or International Sports Federations (IFs). Consequently, governments (both directly, and often indirectly through NOCs) and IFs are, effectively, shareholders in WADA. Half of WADA’s Directors, plus the Chair are IOC members.

In regulatory terms, therefore, the IOC is a shareholder controller of WADA and at least some governments probably have individually significant shareholdings. This sets up its own dynamic but, whatever the intention, the result is that WADA is woefully under-resourced and lacks the powers it would need to succeed.

Finally, it’s important to understand that the IOC, NOCs and IFs are all ultimately dependent on national governments hosting and subsidising sporting events. Therefore, for some governments, there is a predictable premium around “winning”, particularly in home-hosted events like the Sochi Winter Olympics. That is where the revenue - TV and sponsorship income- -and prestige is gained, where the money (direct and indirect) is made.

As I said at the outset, all this can be managed properly, but the vested interests and potential (often unacknowledged) conflicts and perverse incentives don’t need spelling out. However, far too often in sport conflicts aren't managed well, with Sochi the stand out example of how a determined rogue actor can subvert a system.

 If we see international sport as a complex group structure, then WADA is effectively a compliance function, but an underfunded one with insufficient authority across the Group to perform its role effectively. And the narrative arc, since Russia’s institutionalised doping programme was exposed, has been about NOCs, IFs (with a few important exceptions), and the IOC, diluting the impact of that conclusion.

In financial services, it is common to talk about "independent" functions, typically Risk, Compliance and Internal Audit. Yet the resourcing and control (including hiring and firing) of each, as with WADA, ultimately sits with the organisation(s) they are monitoring and reporting on. Control functions’ true “independence” is therefore ambivalent at best, and how well they deliver is dependent on both the safeguards around them and the character of the senior individuals involved. 

[The next blog returns to the series on regulatory failures and will look again at PPI.]