Case Example of False, Inflated and Duplicate Invoices

South Asia

A former employee of an international consulting firm reported that the company’s South Asian branch agreed to pay a kickback in exchange for a contract award, with the bribe to be financed by the submission on false and inflated invoices. The investigation disclosed the following.

The firm’s contract provided that it was entitled to be reimbursed for the actual costs of certain expenses, such as the purchase of computers and office equipment, up to a stated maximum. The company always invoiced for the maximum allowed and attached receipts and other supporting documents in amounts that matched or exceeded the ceiling amounts.

The purported suppliers said in interviews that most of the receipts the company submitted were forged and inflated. Other receipts were in the names of non-existent companies, suggesting that no items were actually purchased. The investigators then exercised audit rights and discovered two sets of records, one indicating the actual cost of the purchased items and the other the inflated, submitted amounts. The company’s accounting staff admitted in interviews that they prepared and submitted the inflated invoices and forged receipts to support them, claiming that they did so at the direction of the local office manager.

The local manager denied any knowledge of the false invoices, and denied that the firm paid a bribe to obtain the contract. The international donor moved to debar the firm world-wide for fraudulent practices, in the expectation that the company’s senior management would agree to disclose the bribe payments and cooperate in an effort to mitigate its sanctions.