How do you determine if a lump sum contract includes the costs of bribes paid to get the contract?

5 months ago

A client has admitted to bribing public officials to get a lump sum contract but states he did not include the cost of the bribes in the lump sum contract. How can we prove this is true?

Senior Legal Associate Levelset

That’s a very interesting and unique situation. While there’s no clear-cut solution here, particularly since bribing of public officials is illegal, it might be hard to know for certain how prices were allocated. However, auditing the contractor’s books should provide a clearer picture. That way, it will be easier to determine what funds were spent on what services (or bribes).

Naturally, it might be hard to access a contractor’s books. So, if that’s not possible, evaluating the other bids for the project might provide some clarity, too. If other bids for the project were at similar prices, then a bribe was likely not included in the contract price – that is, unless it was a very small bribe, or unless the other bidders were also involved in the scheme. Further, it’s also possible that the contract price was artificially depressed to include the bribe at the time of the bid, and that the contractor intended to add change orders to make up the difference. But, if the contractor has been charged with a crime, it might be easier for the general public to access its books.

Alternatively, it might be easier to obtain the records from public officials. Requests for documentation from public officials are often easier to pursue than records from private companies.

But, without access to the contractor’s records or the public officials’ records, it will likely be pretty hard to determine exactly how the cost of bribes were allocated to the job (if that came out of the job price at all).

For more information on construction fraud, here’s an informative article: Construction Fraud: Common Issues and How to Combat Them.

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