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U.K.'s Serious Fraud Office Highlights 'Corruption Indicators'

Bruce Carton | November 23, 2011

The UK's Serious Fraud Office has published a list of what it calls "Corruption Indicators" (via The FCPA Blog). On its website, the agency states that "by its nature corruption can be difficult to detect as it usually involves two or more people entering into a secret agreement." By definition, the secret nature of the agreement makes it difficult for an outsider to the corruption to understand what is going on, but the SFO says that it has identified a number of questionable practices within various sectors, i.e., "corruption indicators" that may be red flags for corrupt practices. 

The SFO's "non-exhaustive" list of Corruption Indicators includes:

  • Abnormal cash payments
  • Pressure exerted for payments to be made urgently or ahead of schedule
  • Payments being made through 3rd party country, eg. goods or services supplied to country 'A' but payment is being made, usually to shell company in country 'B'
  • Abnormally high commission percentage being paid to a particular agency. This may be split into 2 accounts for the same agent, often in different jurisdictions
  • Private meetings with public contractors or companies hoping to tender for contracts
  • Lavish gifts being received
  • Individual never takes time off even if ill, or holidays, or insists on dealing with specific contractors him/herself
  • Making unexpected or illogical decisions accepting projects or contracts
  • Unusually smooth process of cases where individual does not have the expected level of knowledge or expertise
  • Abusing decision process or delegated powers in specific cases
  • Agreeing contracts not favorable to the organization either with terms or time period
  • Unexplained preference for certain contractors during tendering period
  • Avoidance of independent checks on tendering or contracting processes
  • Raising barriers around specific roles or departments which are key in the tendering/contracting process
  • Bypassing normal tendering/contractors procedure
  • Invoices being agreed in excess of contract without reasonable cause
  • Missing documents or records regarding meetings or decisions
  • Company procedures or guidelines not being followed
  • The payment of, or making funds available for high value expenses or school fees etc on behalf of others.

I noticed that at least two of the indicators on the SFO's list (refusal to take vacation time; and missing or incomplete documents) are also included in KPMG's recent "Profile of a Fraudster" report, which identified red flags that could indicate possible fraud. So as we head into Thanksgiving, understand that you really need to leave the office now and go be with your family or everyone will assume you are corrupt!