Bribes and Corruption Flashcards
What is a conflict of Interest?
A conflict of interest occurs when an employee or agent—someone who is authorized to act on behalf of a principal—has an undisclosed personal or economic interest in a matter that could influence his professional role. Thus, an employee with an undisclosed personal relationship with a company that does business with his employer is engaged in a conflict of interest. An employee who has an undisclosed side job would not be engaged in a conflict of interest provided that the job is in a different industry, it does not create a time conflict, and it does not create any personal or economic interest that could influence his ability to act in the best interest of his primary employer.
Most conflicts of interest occur because the fraudster has an undisclosed economic interest in a transaction, but a conflict can exist when the fraudster’s hidden interest is not economic. In some scenarios, an employee acts in a manner detrimental to his company to provide a benefit to a friend or relative, even though the fraudster himself receives no financial benefit.
Conflicts of interest do not necessarily constitute legal violations, as long as they are properly disclosed. Thus, to be classified as a conflict of interest scheme, the employee’s interest in the transaction must be undisclosed. The crux of a conflict case is that the fraudster takes advantage of his employer; the victim organization is unaware that its employee has divided loyalties. If an employer knows of the employee’s interest in a business deal or negotiation, there can be no conflict of interest, no matter how favorable the arrangement is for the employee.
Typical method used to make corrupt payments in bribery and corruption schemes?
Corruption schemes involve the illegal payment of some item of value because anti-corruption laws prohibit individuals from paying, offering, promising to pay, or authorizing to pay or offer money or anything of value to obtain or retain business. There are various ways to make corrupt payments, including: Gifts, travel, and entertainment Cash payments Checks and other financial instruments Hidden interests Loans Credit cards Transfers not at fair market value Promises of favorable treatment
Examples of non-payment bribery?
Bribes do not necessarily involve direct payments of cash or goods. Bribery may be defined as the offering, giving, receiving, or soliciting of corrupt payments—items of value paid to procure a benefit contrary to the rights of others—to influence an official act or business decision. Promises of favorable treatment can constitute corrupt payments. Such promises commonly take the following forms:
A payer might promise a government official lucrative employment when the recipient leaves government service.
An executive leaving a private company for a related government position might be given favorable or inflated retirement and separation benefits.
The spouse or other relative of the intended recipient might also be employed by the payer company at an inflated salary or with little actual responsibility.
