Dive Brief:
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Nike is in the middle of a Kenyan corruption investigation that looks at the company's payments to Kenyan athletes, reports the New York Times.
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For more than 20 years, Nike has paid the Kenyan national runners’ association millions of dollars for its runners to sport the Nike swoosh and other marketing upsides. Nike scrambled to save the deal several years ago when a Chinese rival threatened to unravel the sponsorship with its own offer.
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The resulting deal included an unusual $500,000 “commitment bonus” that may have been vacuumed up by Kenyan government officials, reports the Times. Now, with bribery and other public corruption the target of reform in the country, the deal is under scrutiny by Kenyan authorities.
Dive Insight:
In some areas of the world, bribing officials is an accepted practice to obtain building permits, licensing, and close business deals. It’s not exactly copacetic from the perspective of the U.S. government, though, as Wal-Mart Stores Inc. and its Mexican division, Walmart de México, found out a few years ago.
There are grey areas, however. In some countries, "gifts" are expected during business negotiations. The U.S. Department of Justice has a guide — including case studies — on how to comply with the Foreign Corrupt Practices Act of 1977, which outlaws certain activity, but allows for keeping up with certain business gift customs.
The situation in Kenya certainly seems to fall into some kind of grey area. But, notably, the U.S. government is apparently not stepping in to investigate. In fact, the Times reports that the corrupt practices law doesn’t even cover agreements with sporting organizations because they are not technically government organizations. Rather, they seem to be in a sort of public policy in-between, not government, not private sector, but with fingerprints over both.
It’s Kenya’s own desire to stamp out corruption that has Nike under the microscope here, and possibly under fire. According to the Times, Nike has refused to provide Kenyan officials more information about the deals and says that it hasn't done anything illicit.