Fraud case - A USA public company doing business inFreedonia (a made up name from another Marx Brothers movie!) iscompelled to bribe local officials in order to be the first toreceive a business license for a certain type of industry there.The competition is fierce, but local government officials haveunabashedly spread the word that under the table bribery paymentsto them from the USA company can seal the deal and that's why theUSA company is feeling the pressure to participate in the bribe.This would be a violation of the FCPA.
The USA company participates in the fraud, bribing thegovernment officials sufficiently to get the license first, beforetheir competition. The payments are on the books, but hidden, so tospeak, in order to get the tax deduction. The payments are cleverlydisguised in the expense accounts to appear as normal expenditures.Foreign Corrupt Practices Act (FCPA), we saw that a key to reducingthe penalty is through keeping books and records that are clean andtransparent
You are the USA government investigator searching for the fraudafter the US government has been tipped off that the fraud happenedin Freedonia.
- What income statement expense accounts would youresearch for evidence of bribery payments being made even thoughnot so indicated as bribery payments?
- What type of evidence would you be looking to gather toprove the case?
