The SFO’s Red Flags

The U.K.’s Serious Fraud Office has a neat list of ‘red flags’ on its site. But they’re not called ‘red flags.’ That term is apparently an Americanism.

The SFO’s list of ‘corruption indicators,’ it says, is ‘not exhaustive and the ingenuity of those involved in corruption knows no bounds!’

(We always enjoy the SFO’s enthusiasm. Has the DOJ ever used an exclamation point except when referring to Yahoo!?)

Here, then, are the SFO’s ‘corruption indicators’:

•     Abnormal cash payments

•     Pressure exerted for payments to be made urgently or ahead of schedule

•     Payments being made through 3rd party country, eg. goods or services supplied to country ‘A’ but payment is being made, usually to shell company in country ‘B’

•     Abnormally high commission percentage being paid to a particular agency. This may be split into 2 accounts for the same agent, often in different jurisdictions

•     Private meetings with public contractors or companies hoping to tender for contracts

•     Lavish gifts being received

•     Individual never takes time off even if ill, or holidays, or insists on dealing with specific contractors him/herself

•     Making unexpected or illogical decisions accepting projects or contracts

•     Unusually smooth process of cases where individual does not have the expected level of knowledge or expertise

•     Abusing decision process or delegated powers in specific cases

•     Agreeing contracts not favourable to the organisation either with terms or time period

•     Unexplained preference for certain contractors during tendering period

•     Avoidance of independent checks on tendering or contracting processes

•     Raising barriers around specific roles or departments which are key in the tendering/contracting process

•     Bypassing normal tendering/contractors procedure

•     Invoices being agreed in excess of contract without reasonable cause

•     Missing documents or records regarding meetings or decisions

•     Company procedures or guidelines not being followed

•     The payment of, or making funds available for high value expenses or school fees etc on behalf of others.

The DOJ’s list of ‘red flags’ in the Lay Person’s Guide to FCPA can be downloaded as a pdf here.