What Can MLB Learn from the NBA?
On the heels of Sports Illustrated’s (SI) explosive story earlier this year on the Dallas Mavericks, the magazine featured another exclusive story on October 8 entitled, “Inside the Underbelly.” This story by L. Jon Wertheim described “the migration of Latin American talent to Major League Baseball – particularly players from Cuba – has long been an unseemly business, shrouded in don’t-ask-don’t-tell secrecy.” Wertheim went on to report on “tales of bribes, kickbacks, side deals with smugglers, dubious immigration documents and middlemen skilled at working around immigration laws.”
While the Mavericks’ story last February described the corrosive culture within the team’s front office where sexual harassment was commonplace, it did not detail any serious criminal conduct on the part of team officials. The October 8 story may be different. Reportedly, SI has learned that “the U.S. Department of Justice has begun a sweeping probe into possible corruption tied to the recruitment of international players, centered on potential violations of the Foreign Corrupt Practices Act.” SI has also learned that “alleged victims of smuggling and human trafficking operations have already given evidence to law enforcement agents or testified before a federal grand jury.” In his article, Wertheim further reports on a dossier that SI obtained “that was provided to the FBI at the beginning of the probe.” Reportedly, the dossier includes, “videotapes, photographs, confidential legal briefs, receipts, copies of player visas and passport documents, internal club emails and private communications by franchise executives in 2015 and 2016.”
While the SI story reports that the Los Angeles Dodgers figure most prominently in the dossier, it is probable that the Dodgers are not the only team involved.
Whereas compliance professionals are familiar with the Foreign Corrupt Practices Act, many sports leaders in the U.S. have little, if any, experience with it. In a nutshell, the law generally prohibits the payment of bribes to foreign officials to unlawfully assist in obtaining or retaining business.
When the Dallas Mavericks’ corrosive culture was exposed by SI earlier this year, the team owner, Mark Cuban, and the NBA Commissioner, Adam Silver, acted quickly and decisively. Cuban engaged a law firm to conduct an independent investigation of the allegations of sexual harassment and any related wrongdoing in the Mavericks’ front office. Silver promptly took other steps including the establishment of a hotline to receive reports of wrongdoing from NBA team employees. Upon receipt of the investigator’s report, Silver directed all League teams to review the law firm’s report and to make changes in their operations based on the recommendations in the report. While the law firm did not specifically recommend that the Mavericks’ establish a formal compliance program, many of the recommendations in the report addressed the essential components of a compliance program.
The Mavericks, following the publication of the SI story and after receiving the investigator’s report, have taken the following action: a Chief Compliance and Ethics Officer was employed, its Code of Conduct was updated, a hotline for anonymous reporting of wrongdoing was established, its employee training program was expanded and improved, policies and procedures to investigate and adjudicate reports of wrongdoing were established, among other steps.
Presumably, the Los Angeles Dodgers and Major League Baseball are now working to develop a strategy for responding to any charges which may be made against them by the Department of Justice. At the same time, they would do well to review the Mavericks’ and the NBA’s response to the crisis they faced, and take similar steps to both protect their reputations and prevent any future wrongdoing within their ranks.