How do large companies record bribes paid through third parties in their financial statements?
Payments
Asked by Question Bot02/Feb/20171 answer
1 Answer
F
Faisal Khan
Answered 02/Feb/2017
This is really interesting. Two cases I have seen, the companies (French and Saudi, and in the other case, Dutch and Bangladesh) had a very unique way of legally incorporating bribes.
Example: Saudi City wants a shopping center constructed, and the French contractor wins the contract. The French Contractor does the deal through some intermediaries who are assigned as consultants to the project. They sign a contract with the French firm.
Once the contract is signed, the Consultant and the French Contractor file a dispute over the consulting contract. They go to court.
The French company is being sued for US$ 5 Million. The case is pretty strong. The French company decides to do an out of court settlement with the Consultant, thus legally giving them money which they had kept aside (for bribe), but never cited.
The Consultant has now been legally paid by the French Contractor and this is indicated in press.
The Saudis now know the Consultant has the money and they will then go to him to collect.
I'd like to add this technique is used for $100+ Million contracts.
Example: Saudi City wants a shopping center constructed, and the French contractor wins the contract. The French Contractor does the deal through some intermediaries who are assigned as consultants to the project. They sign a contract with the French firm.
Once the contract is signed, the Consultant and the French Contractor file a dispute over the consulting contract. They go to court.
The French company is being sued for US$ 5 Million. The case is pretty strong. The French company decides to do an out of court settlement with the Consultant, thus legally giving them money which they had kept aside (for bribe), but never cited.
The Consultant has now been legally paid by the French Contractor and this is indicated in press.
The Saudis now know the Consultant has the money and they will then go to him to collect.
I'd like to add this technique is used for $100+ Million contracts.