Step Six: Begin the External Investigation

This section sets out the standard investigative steps during the external stage of a complex corruption and fraud investigation.  Although, as always, the specific steps will  vary according to the facts of the case, the primary objective in most cases is the same: to identify witnesses and documents that can provide the following types of evidence.

In Corruption Cases:

Look for evidence of the payment of a thing of value to improperly influence the actions of another.

Potential witnesses include:

1. Losing and excluded bidders, who may have knowledge, among other things, of:

  • Bribe demands from project or government officials, or
  • Instructions from such officials to use certain agents, subcontractors and suppliers (in which the officials might have a hidden interest) or
  • “Low ball” price offers by the bidders that were rejected (indicating corruption in the selection process)
  • Other circumstantial evidence of corruption, such as unduly short notices of opportunities to bid, the inability to buy bid packages, anomalies in Bid Evaluation Reports, threats from project or government officials to discourage bidding or unfair disqualification of certain bidders
  • Information in the industry regarding corrupt parties and information on officials that live beyond their means

2. Former employees of the project or of the winning contractor, who may have knowledge of improper payments and the related bid rigging schemes, the life style of the officials etc.

Potentially relevant documents include:

  • Project procurement and implementation files, including bid notices, retained bids, scoring sheets and Bid Evaluation Reports
  • Copies of losing bids (to compare to retained copies by the bidders to identify possible changes to the submitted bids) and complaints from losing bidders in the procurement files
  • Public records concerning the ownership of the winning bidders, subcontractors and suppliers, property ownership by project officials, etc.
  • Documentation from the winning bidders, including evidence of bribes hidden as payments to subcontractors, suppliers  or agents, false or inflated invoices used to generate bribe funds, etc.  Try to determine, for example, if a contractor failed to perform work to the contract specifications, substituted cheaper materials or failed to lease the necessary equipment to perform work on a road project.

This information can be obtained by exercising contract audit rights, serving a subpoena or requesting them from a compliant contractor.

In Fraud Cases:

Look for evidence of forged documents, false statements or omissions of material facts.

Potential witnesses include:

  • Persons who have direct personal knowledge of the truth or falsity of questionable information in proposals, CVs, claims for payment, etc.
  • The purported issuers of bid securities, manufacturer’s certificates, etc., to confirm or deny the legitimacy of questioned documents
  • Inspectors and testing personnel regarding the accuracy of submitted test and inspection results and work completion certificates

Potentially relevant documents include:

  • Documents that demonstrate the truth or falsity of claims, e.g., public records regarding the incorporation or ownership of a bidder; copies of CVs of key personnel submitted on previous projects (to compare to the current submitted CVs)
  • Copies of legitimate bid securities or manufacturer’s certificates (to compare to the submitted documents)
  • Previously submitted reports and written work product (to identify copied or plagiarized reports)

Other possible steps:

  • Re-inspect and re-test goods and works with independent inspectors to determine if they meet contract specifications and the claims by the contractor
  • Exercise contract audit rights, serve a subpoena or request documents from a contractor to compare internal records to invoices and claims, etc.

General Order of External Interviews

The usual order of interviews is to begin with the outer circle of informed but disinterested witnesses, then move inward to the “facilitators,” followed by the co-conspirators, and finally the principal subject, as illustrated by the example below.

Example of Order of External Interviews

A contractor is alleged to have: 

  • Bribed a contracting employee through an agent to win a bid and
  • Thereafter substituted cheaper non-compliant materials 
  • Which it acquired  from a supplier, who was not involved in or aware of the scheme

A logical order of interviews might be:

  1. Independent industry sources regarding price and quality issues
  2. Losing or excluded bidders regarding the same topics and possible requests for bribes
  3. The supplier to the winning bidder (to determine what goods were provided at what prices)
  4. Former (disgruntled) employees of the winning bidder
  5. The agent, to attempt to gain his cooperation, based on the previously obtained evidence
  6. The winning bidder (to insist on the production of financial records and to attempt obtain its cooperation)
  7. The alleged recipient of the bribe to demand relevant records and to attempt to obtain a confession