Trade Capacity Vietnam Manifestations of Corruption and How to React

Forms of Corruption and how to react Abuse of Functions Abuse of functions refers to a public employee or public office holder that is doing something which is illegal or something that the official has no legal authority to do, in order to obtain a personal economic benefit or cause an illegal damage to others. Examples: A minister accepts a bribe to influence contract award. A supervising engineer extorts a bribe to certify a contract payment. A customs officer accepts a facilitation payment to issue a permit. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Bribery To offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage. How are bribes paid? Direct payment Use of an intermediary Agents Joint ventures Subsidiaries or other group companies Sub-contractors sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Bribery A bribe may be paid in situations where a related party is unaware of the bribe. For example a contractor may be unaware that: an agent intends to use part of his agency fee to pay a bribe; a joint venture partner has paid a bribe in order for the joint venture to win the contract; a subsidiary in another country is paying bribes to win contracts; a sub-contractor paid a bribe to a representative of the project owner to ensure that the contractor won the tender. The contractor may have suspected that there was a likelihood of corruption (for example, where an agent is paid by way of a large commission) but have deliberately avoided making enquiries and taking reasonable preventive action. Such willful blindness (or “turning a blind eye”) will be treated as criminal. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Collusion Collusion is an agreement, usually secretive, which occurs between two or more persons to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair advantage. It can involve an agreement among companies to divide the market, set prices, or limit production. These arrangements are often described as a “cartel”, “anti-trust” or “anti-competitive” offence. It can involve wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Conflict of Interest A conflict of interest exists when someone, such as a public official, has competing professional obligations or personal or financial interests that would influence the objective exercise of her/his duties. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Embezzlement Embezzlement is the fraudulent appropriation of money or property by a person entrusted to safeguard the assets in another's interests. Embezzlement can be committed by a person entrusted with private or public resources. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Extortion Extortion is the unlawful use of one's position or office to obtain money through coercion or threats. One example would be when customs officials request undue 'customs duties' from importers as a condition to clear their goods. If the victim of extortion pays as demanded, then it is likely that he or she will be liable for a bribery or facilitation payment offence. sequa, March 2017 Forms of Corruption and how to react

Facilitation Payments Facilitation payments are a form of bribery made with the purpose of expediting or facilitating the performance by a public official of a routine governmental action and not to obtain or retain business or any other undue advantage. For example, unofficial payments may be made in order to obtain import or work permits, or installation of telephone lines, or to pass through a roadblock. sequa, March 2017 Forms of Corruption and how to react

Facilitation Payments Facilitation payments are typically demanded by low level and low income officials in exchange for providing services to which one is legally entitled without such payments. A facilitation payment is distinguished from a bribe in that a facilitation payment is a payment made to ensure that an official performs his duty properly, whereas a bribe is a payment made to ensure that an official performs his duty improperly. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Fraud Fraud usually occurs where a person dishonestly makes some false representation in order to gain some financial or other advantage or in order to cause a loss to another person. In this case, a person is acting “dishonestly” if he makes a representation knowing that it is, or might be, untrue or misleading. Bribery and fraud often work together. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Fraud Claims fraud: A contractor may submit a contract claim to the project owner which the relevant manager of the contractor knows is false or exaggerated, or does not honestly believe is true. For example, the contractor may provide false reasons in support of the claim, exaggerate the financial amount claimed, or fabricate or falsify evidence to support the claim. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Fraud Many people wrongly believe that submitting inflated claims or false evidence is a legitimate part of business, or that it is justified because the other party is expected to use similar tactics. In fact, it is highly likely to be a criminal offence of fraud. Claims fraud obviously works on both sides of the contract structure. A project owner would be committing fraud against the contractor if it knew that the contractor’s payment claim was valid, but used false reasons to refuse to pay. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Gifts In the context of corruption, a gift is a financial or other benefit, offered, given, solicited or received with an obligation to provide any benefit in return. Gifts and hospitality may be corrupt, may be used to facilitate corruption, or may give the appearance of corruption. Gifts may include cash or assets given as presents, and political or charitable donations. Hospitality may include meals, hotels, flights, entertainment or sporting events. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Kickbacks A kickback is a bribe to obtain an undue advantage, where a portion of the undue advantage is 'kicked back' to the person who gave or is supposed to give the undue advantage. The payment of kickbacks is a corrupt practice which typically occurs in connection with a public procurement process when a company pays a procurement officer to illegally award the contract to the company in return for a bribe. sequa, March 2017 Forms of Corruption and how to react

Forms of Corruption and how to react Money Laundering Money laundering is a process whereby the identity and origin of illegally obtained money, such as bribes, are concealed or disguised. The objective of money laundering is to make illegally obtained money to appear as if it comes from a legitimate source. Examples: A government official transfers a bribe paid into a bank account in one country to a bank account in another country. sequa, March 2017 Forms of Corruption and how to react