Case Example of Split Purchases

Nutrition Project

The owner of a small training company boasted to colleagues that he was receiving multiple sole source contract awards in exchange for kickback payments to local project officials and the supervising employee of the international donor.  The boasts eventually reached the donor agency which conducted an investigation.

Their inquiry showed that the training firm was organized just weeks before the project was launched, and that it received more than a dozen sole source contracts, all for around the equivalent of US $75,000.  This was just under the maximum permissible amount for such awards.  The sole source threshold was unusually high as the result of the intervention of the corrupt donor official who handled all procurement matters, and approved all of the sole source awards, despite not being authorized to do so.

In an attempt to avoid detection of the scheme, the owner of the training company set up a number of other shell companies, with no staff or assets, to receive further sole source contracts.  None of the companies performed all of the services required under the contracts, and many of the contracts were not performed at all.  The donor fired the supervising employee and referred the local officials and owner to the borrower country for further action.