Module 11: Corruption dilemmas
The legal principles are the same as given in the answer to Dilemma 1. In submitting the claim, you are making a representation as to the contractual payment that Buildwell is owed. In particular, you are representing that these are Buildwell’s “actual additional costs which directly result from the variation”.
It is likely to constitute the criminal offence of fraud if you add the $70,000 suggested by the Commercial Director, as you will be making a representation which you know is false, in order to gain some financial advantage for yourself or another person or organisation. You personally, the Commercial Director, and Buildwell, could all be liable for fraud.
The correct and safe approach is always to state in a claim only what you honestly believe to be true. In this regard, you believe that the $130,000 claim is true, but not the additional $70,000. You are not entitled to add an additional unjustifiable amount as a “negotiating margin”. You are only entitled to claim what you honestly believe to be due. You can during a negotiation reduce a valid claim in order to achieve a commercial settlement. However, you are not entitled falsely to inflate the claim so as to give the false impression that you are reducing a valid claim so as to achieve a settlement.
What do you do if the NRA knocks down your accurate claim from $130,000 to $100,000? You could tell the NRA that (1) you are not an organisation which artificially increases its claim – you have strict ethical policies, and only claim what you reasonably believe is due; and (2) that $130,000 is a reasonable and accurate claim, and you cannot accept $100,000. You can provide all your calculations and supporting evidence to the NRA. If the NRA persists in reducing your claim to $100,000, and refuses to pay more, then the NRA and its relevant staff could be committing a criminal offence against Buildwell unless they honestly believe that they are justified in reducing the claim.
If Buildwell has a reputation with the NRA as an organisation which artificially increases its claims (as appears to the case taking into account the actions of the Commercial Director), then it will be difficult to get the NRA to believe that your claim is accurate. It takes time and commitment for an organisation to build up a reputation for total integrity.
January 2025
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