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Business is competitive and severe competition can sometimes create an incentive to secure a contract by illegal payments or inducements - an illegal act of corruption. Public sector activities can also create a climate where the award of contacts could be influenced by acts of bribery. Offences are committed by both the person making corrupt payments and by the person who receives them.
There are several aspects to corruption. If the decision to make corrupt payments is approved by the directors or principals of an organisation, the organisation itself is liable and at risk of prosecution. In other cases an employee may agree to accept corrupt payments for his or her own personal benefit, against the interests of the employer.
In either case, the seller's profits are eroded and the buyer ends up paying extra in the long term.
Corrupt payments can take the form of entertaining, free travel, hospitality or gifts, as well as cash. Some police investigations have identified elaborate schemes of shell companies which invoice suppliers for non-existent work to create a veneer of legitimacy for the transfer of payments.
Warning signs
If any of the following signs are detected it may not be evidence of corruption, but will merit more detailed examination. See the contracts page of our risk section.
| No evidence of a tender |
Lack of a tender arise for valid reasons but if a contract has not been submitted to tender, you should find out why. |
| Uncommercial bids |
Contractors may bid to carry out work at a low price as a result of being provided inside information. The cost of the contract may only become evident after hidden extras have been added. |
| Uncompetitive bids |
If a contractor has submitted a bid at a very high price it may be that different specificatons were sent out to favour another bidder. The bidders may have colluded to fix the contact in favour of one. |
| Contracts awarded to the same contractor |
There should be a list of approved contractors, all of which are invited to bid. |
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