This section lists sixteen of the most common and costly corruption, bid rigging, collusive bidding and fraud schemes in development projects. Under each scheme see a brief description and a complete list of red flags for the offense, actual case examples and follow up steps to help you determine if the scheme is in fact present.
The schemes fall into the following four categories:
Corruption
Corruption, which includes bribes and kickbacks and hidden interests. Bribes and kickbacks refer to the giving or receiving of a thing of value to improperly influence a contract award or other action; hidden interests refers to undisclosed financial interests in contractors and consultants by project and government officials. Such offenses constitute a “corrupt practice” under IFI (International Financial Institution) Guidelines.
Bid Rigging
Bid rigging which refers to various schemes by project officials to rig the selection process to ensure that a favored bidder wins and to exclude competitors. As such, bid rigging is both a red flag of corruption and circumstantial evidence of corrupt influence.
Collusive Bidding
Collusive Bidding which refers to agreements among bidders to pre-select the winner, submit artificially high priced bids and otherwise defeat competition. Collusive bidding is punished as a collusive practice under IFI Guidelines.
Fraud
Fraud, which includes, among other offenses, knowing and willful misrepresentations, the willful omission of material facts, the forgery of signatures or documents, the failure to meet contract specifications and fraudulent billings. The various forms of fraud constitute fraudulent practices under IFI Guidelines.