BIFRANCHISE
| Joined: | 2009-02-16 |
| Location: | |
| Posts: | 1253 |
| Status: |
Offline
|
|
Secret commissions and bribery are off-book frauds and are found in the form of kickbacks, gifts, or gratuities to government employees from contractors or to private business employees from vendors.
1. Bribery – GIVING OR RECEIVING A THING OF VALUE (cash or money, too-generous gifts & entertainment, payment of travel & lodging expenses, payment of credit card bills, “loans,” promises of future employment & interests in businesses) TO INFLUENCE AN OFFICIAL ACT. The term official act means that traditional bribery statutes only proscribe payments made to influence the decisions of government agents or employees. Bribery includes official bribery, which refers to the corruption of a public official, and secret commissions, which refer to the corruption of a private individual to gain a commercial or business advantage. Proof of corrupt influence often involves demonstration that the person receiving the bribe favored the bribe-payer in some improper or unusual way, such as by providing preferential treatment, bending or breaking the rules, taking extraordinary steps to assist the bribe-payer, or allowing the bribe-payer to defraud the agency or company.
2. Secret Commissions - GIVING OR RECEIVING ANY “REWARD, ADVANTAGE, OR BENEFIT” FOR DOING OR REFRAINING FROM DOING ANY ACT THAT WOULD SHOW FAVOR OR DISFAVOR WITHOUT THE KNOWLEDGE OR CONSENT OF THE PRINCIPAL. Naturally, payments are made every day to influence business decisions, and these payments are legal. When two parties sign a contract agreeing that one will deliver merchandise in return for a certain sum of money, this is a business decision that has been influenced by the offer of something of value. Obviously, this transaction is not illegal. In a secret commission scheme, an employee receives the payment without his employer’s consent. In other words, SECRET COMMISSION CASES DEAL WITH THE ACCEPTANCE OF UNDER-THE-TABLE PAYMENTS IN RETURN FOR THE EXERCISE OF FAVOR OF ONE ENTITY OVER ANOTHER IN A BUSINESS TRANSACTION. Notice, offering a payment can constitute a bribe, even if the illicit payment is never actually made.
Bribery and secret commission schemes generally fall into two broad categories:
A. Kickbacks – undisclosed payments made by vendors to employees of purchasing companies.
B. Bid-rigging schemes – fraudulently assisting a vendor in winning a contract through the competitive bidding process.
Red Flags of Bribery Schemes:
I. The Corrupt Recipient
• The Big Spender – This is the most common way to detect corrupt recipients. Some recipients spend their money less conspicuously by paying off debts or paying down mortgages.
• The Gift Taker – An official or executive who regularly accepts inappropriate gifts is often one susceptible to larger payments.
• The “Odd Couple” – Corrupt payers and recipients often appear to have very friendly social relationships. Frequent outside contacts, particularly between parties who do not appear to have much in common, might be a sign of deeper and more troublesome ties between the parties.
• The Rule Breaker – This is often the most significant characteristic. A person taking payoffs often will take action on his own, or direct a subordinate to bend, break, or ignore standard operating procedures or rules to benefit the payer. Particular attention should be directed toward those who insert themselves into areas in which they normally are not involved or attempt to assert authority or make decisions for which they are not responsible.
• The Complainer – A corrupt recipient often makes excuses for deficiencies in the payer’s services, such as poor quality, late deliveries, or high prices. Look for higher prices, “extra” payments, or commissions approved by the suspect, because these might be the source of kickback fraud.
• Genuine Need – Greed, rather than need, seems to be the motivating factor in most cases. Occasionally, however, legitimate pressures, such as illness of family members or drug addiction, can induce participation in an illegal scheme.
II. The Corrupt Payer
• The Gift Bearer – businessperson who routinely offers inappropriate gifts, provides lavish business entertainment, or otherwise tries to ingratiate himself often is the one offering still more valuable inducements.
• The Sleaze Factor – The corrupt payer frequently is a person known or suspected in the industry to be involved in payoffs or other fraudulent activities.
• The Too-Successful Bidder – A supplier who consistently is awarded work, without any apparent competitive advantage, might be providing under-the-table incentives.
• Poor Quality, Higher Prices – Particularly after the corrupt relationship has been sealed, the quality of product and service provided by the payer might deteriorate and prices increase.
• The One-Person Operation – In certain industries, small, closely held companies that do not have the reporting and internal control requirements of their larger, publicly held competitors resort to payoffs as a means of marketing advantage. Be alert for independent sales representatives, consultants, or other middlemen, because they are favored conduits for funneling and concealing illegal payments.
|
