How are bribes paid?

• Direct payment:  A bribe may be passed directly between the person paying the bribe and the person who will benefit from the bribe.

1. Agents.  The most common form of intermediary is the agent.  A contractor who wishes to hide the payment of a bribe may appoint an agent who has contacts with a representative of the project owner or with a government official.  The contractor will enter into an agency agreement with the agent which purports to be an agreement for legitimate services.  However, the scope of those services will often be false or exaggerated and the size of the payment due under the agreement will be significantly in excess of the value of the legitimate services to be provided by the agent.  The payment may sometimes be expressed as a percentage of the contract price.  The agent will normally receive the payment when the contractor is awarded the contract.  The agent will then pass the whole or part of the payment to the representative of the project owner or the government official who has dishonestly ensured that the contractor would win the contract.  The payment is often made in foreign currency into an offshore bank account. 
   
   
2. Joint ventures.  An international joint venture, comprising joint venture partners from several countries, may arrange for a bribe to be paid by the joint venture partner who is resident in the country which is least likely to discover or punish the bribery. 
   
   
3. Subsidiaries or other group companies.  Where a contractor is part of a multinational group, arrangements may be made by the group for a bribe to be paid by a subsidiary or other group company which is located in a country where the bribe is less likely to be detected or punished.  The subsidiary or other group company may then be repaid by the contractor through inter-company charges for false services or services of inflated value.  
   
   
4. Sub-contractors.  A contractor may channel a bribe through a corrupt sub-contract arrangement.  For example, a sub-contract may falsely state that certain services are to be provided to the contractor in return for a specified payment.  In reality, the sub-contractor will not provide these services or will provide services of a much lower value than the price agreed.  The balance of the payment will then be passed on by the sub-contractor to the relevant party as a bribe. 
   
   
5. In each of the above cases, the bribe may have been deliberately paid with full knowledge of all relevant parties.  Alternatively, a bribe may be paid in situations where a related party is unaware of the bribe.  For example a contractor may be unaware that:
   

   a) an agent intends to use part of his agency fee to pay a bribe;

   b) a joint venture partner has paid a bribe in order for the joint venture to win the contract;

   c) a subsidiary in another country is paying bribes to win contracts; 

   d) a sub-contractor paid a bribe to a representative of the project owner to ensure that the contractor won the tender.

   In such situations, a contractor may be genuinely unaware that these practices are occurring.  However, in some cases, the contractor may have been wilfully blind to the circumstances.  In other words, 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 wilful blindness (or “turning a blind eye”) will be treated as criminal in many jurisdictions.