Elements of Proof of Corrupt Practices

Definition

IFI Guidelines define “corrupt practices” as:

“Offering, giving, receiving or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.”

Elements of proof

  • Offering, giving, receiving or soliciting
  • Directly or indirectly
  • Anything of value
  • To influence improperly
  • The actions of another party

Offering, giving, receiving or soliciting

An offer of, or demand for a bribe, even if not paid, can violate IFI Guidelines.

Directly or indirectly

“Indirectly” can refer to bribes offered, demanded or paid through a middleman or other intermediary, such as family members of a project official.  A common example is payments by contractors to the children of project and government officials studying abroad.

Anything of value

The “thing of value” need not be money, and often is not.  Any tangible benefit given or received with corrupt intent can be a bribe.

“Things of value” that have been offered and paid as bribes in development projects include:

  • Expensive gifts, paid travel and lavish entertainment provided by contractors to project or government officials
  • Employment by contractors of children and spouses of project or government officials, often in “no show” positions
  • Payment by contractors for “study tours” in developed countries for project or government officials and spouses
  • Leases by contractors of office and living accommodations owned by project or government officials, usually at inflated rates.
  • Gifts by contractors of their inventory or services, e.g., building or equipping a second house for a project official
  • Prostitutes provided by contractors to project officials and inspectors
  • Free use of an apartment, or free use of a leased car, etc.
  • “Donations”  to social funds, NGOs or political parties
  • Cash payments to project or government officials and inspectors, directly or through subcontractors or other middlemen, disguised as legitimate fees and commissions.  Contractors also can generate cash for the payments by inflating expenses
  • Payment by check or wire transfer of bogus “fees or commissions,” often an agreed percentage of the contract obtained, and paid through a middleman or a shell company set up by the recipient
  • Hidden ownership interest by project or government officials in a contractor, consulting firm or supplier

Payment of a thing of value usually is proven by direct evidence, such as:

  • Statements by a witness with direct personal knowledge of the payments (most commonly, such a witness is an employee of the bribe payer who discloses the payments as part of cooperation agreement in order to mitigate sanctions against the company for another offense), or
  • Incriminating email or other communications between the parties regarding bribe payments (a very common source of evidence) , or
  • Evidence of the payment of bribes obtained from the contractor through a contract audit of its books and records, or
  • Evidence of the receipt of bribe payments obtained through a financial investigation of the suspected recipient.

Corrupt payments also can be proven circumstantially, for example, by:

  • Evidence that a contractor paid an agent an excessive fee, or a fee for which no legitimate services were received, or a fee that was supported by false documentation, or
  • Proof that the alleged bribe recipient displays sudden wealth, with no legitimate source of funds.

Circumstantial evidence of corrupt payments is most effective when it is used to corroborate other evidence, for example, evidence that an official is living beyond his means, offered to corroborate statements by witnesses that they gave the official large cash bribes.

To influence improperly

Payment of thing of value to a project official does not constitute a corrupt practice unless the payment was intended to or did in fact “influence improperly” the recipient. Improper influence usually is proven circumstantially, for example, by showing that the alleged bribe payer received favorable treatment from project officials in the bidding process.  It also can be proven directly, for example, through email or other communications between the parties in which the corrupt agreement is discussed.

Proof of improper influence can be difficult if the method of payment is ambiguous, for example, a contribution to a “social fund” by a contractor, especially if there is no obvious connection in time or otherwise between such payments and the alleged influence.

The actions of another party

“The actions of another party” can include, among many other things, acts by project officials to approve a contract award to a bribe payer, by inspectors to approve substandard works, or acts by project staff to approve payment of an invoice.   A “party” can be a public official or private party.