TRACE International, the leading global anti-bribery standard setting organization, recently published the third in its biennial How to Pay a Bribe: Thinking Like a Criminal to Thwart Bribery Schemes series. The collection offers an insider’s view on how bribery and corruption impact international business, making it an excellent instructional tool for compliance practitioners.
In a four-part series published exclusively on Corporate Compliance Insights, TRACE offers a preview into the 2016 edition of How to Pay a Bribe. The complete collection is available for purchase on Amazon.
This story is based on actual events, although some details – such as dates and names of entities and individuals – have been changed. It is a story concerning fraud and corruption in public procurement and a tale of a culture that not only permits, but expects payments to government individuals – as a condition of public contracting. Such practices are all the more troubling when involving important medical products and other goods needed for public health. A general tolerance for graft creates a culture of impunity for bribe payers and the recipients of bribes and a lack of accountability – even in the face of hard evidence.
Read Part 1 here.
The next day, I had my first meeting with Lee at SGC’s offices in Singapore, and I began by asking him about his background. Lee told me that he’d worked at SGC for over 20 years, had always been based out of Singapore and that his focus during that time had almost entirely involved the selling of LLINs in Southeast Asia. Lee’s compensation was heavily based on sales volume and revenue; hence, he was under a lot of pressure to win contracts. The LLIN contracts were quite valuable, often running into the millions of dollars. The most recent contract awarded by the Cambodian Ministry of Health exceeded US$8 million. The aggregate value of the contracts over the years easily exceeded US$20 million.
When I brought up the allegations that had surfaced, Lee initially tried to deny any wrongdoing, only admitting to me that he had developed a personal relationship with some of the officials in the ministry who he’d known for over 15 years. Although Lee was a master of the art of avoiding direct answers to questions, he openly complained about corruption and fraud in the sector more broadly. Before I confronted him with the very damning evidence that we had gathered, Lee denied everything.
However, Lee lamented how he’d repeatedly been asked to do favors for officials. He explained that just a few months earlier, the Minister of Health, Duong Che, had asked him for help finding a doctor in Singapore for a health condition, and also sought his help for the travel expenses. Lee didn’t see the problem with this, distinguishing these “favors” from actual payments of money. At first, Lee admitted to only having obliged the medical and travel requests, but soon other “favors” were revealed. Only after we showed him emails where he had admitted that he’d purchased Che an expensive watch and had offered a “gift” for Che’s daughter upon her graduation did Lee acknowledge that it had happened. As Lee explained, he believed that this was simply the way things worked in Cambodia and the way things had worked forever.
Quickly after my interview with Lee, I realized that The Global Fund would need to expand its investigation to the Ministry of Health in order to better understand the requests that had been made and the process for awarding the contract to SGC. Che had had the final say in the contract award, and his decision was neither appealable nor reviewable. I knew that the Ministry had never undergone such a deep investigation, including requests for access to their emails and computer media and data. Initially, the government balked and refused to allow my team into the offices. I had to involve the Executive Director of the Fund to intervene on our behalf and condition further grant awards upon cooperation with the investigation. Needless to say, these were tense moments. Government officials surrounded our team. Drivers who met our team members at the airport were reporting back to government officials through ear pieces. We swept our hotel rooms for listening devices and found several.
Ultimately, the government relented and cooperated. In the end, the team imaged more than 78 government computers from four government offices. This was the first time such an intrusive investigation had ever been conducted by an outside entity within the country. Other donor partners watched these events unfold closely, with amazement that we had the audacity to undertake such a comprehensive and deep effort within a government ministry — and even more amazed when we succeeded.
Even so, the Ministry did everything it could to hinder our investigation. Local investigators and administrative assistants we’d hired to copy documents were subject to varying forms of harassment, including having their pictures taken and being followed from the building to their hotels. Several of these workers ran from the government building, many of them screaming, claiming that they would end up in the infamous killing fields outside of Phnom Penh. My lead investigator tried to calm these frantic young professionals, but many of them left the country immediately thereafter.
But given that further grants were conditioned upon cooperation, the Ministry ultimately had no choice but to consent to our requests. We sent a replacement team in, accompanied by our senior staff, and we completed the work. Removing the computer hard drives from the offices, and the country, was a true challenge. Eventually, we were only able to package the drives and take them back through customs and out of the country with the assistance of the CIA’s Regional Security Officer. To give the reader an idea of the difficulty we faced, I received an anonymous call at my hotel room that night, where the caller claimed that child pornography had been intentionally installed on the computer drives to cause us a problem if the images were searched as we attempted to get them out of the country. (In fact, some actually did have this material on the drives after we reviewed it back at our offices in Geneva. However, it was evident that the images had been on there for some time).
Read on in Part 3, published on May 4.
TRACE International and TRACE Incorporated are two distinct entities with a common mission to advance commercial transparency worldwide by supporting the compliance efforts of multinational companies and their third-party intermediaries. TRACE International is a nonprofit business association that pools resources to provide members with anti-bribery compliance support while TRACE Incorporated offers both members and non-members customizable risk-based due diligence, anti-bribery training and advisory services. Working alongside one another, TRACE International and TRACE Incorporated offer an end-to-end, cost-effective and innovative solution for anti-bribery and third-party compliance. For more information, visit www.TRACEinternational.org.
TRACE Member companies should write to firstname.lastname@example.org to request their free copy of How to Pay a Bribe: Thinking Like a Criminal to Thwart Bribery Schemes. Others can purchase the book by clicking here.
To learn more about the How to Pay a Bribe series and other publications from TRACE International, visit www.TRACEinternational.org.