Corruption and Fraud Stunt Third-World Growth, Part Two

In the May/June issue of The White Paper, we learned how corrupt officials burden developing countries with unfinished projects and crushing debt, which can lead to economic decline and international terrorism.

Specifically, we examined the three most common and inter-related fraud schemes that afflict international projects: kickbacks and bribes to influence the award of a contract, bid rigging to assure selection of the corrupt bidder, and fraud to recover the cost of the bribes and exploit the corrupt relationship.

Here we look at red flags, countermeasures, proof of fraud and corruption in international cases, and possible remedies.

Red Flags of Corruption and Fraud
Corruption and fraud in international relief projects exhibit common telltale signs.

Bribes and Kickbacks
Local "agents" or "consultants" appear touting ill-defined, generic, or unneeded services. Many of the warning signs of corrupt agents (including loan brokers) are rather obvious:

Other common red flags of corruption include:

Bid Rigging
Bid-rigging flags resulting from collusion among contractors and project officials include:

Bid rigging red flags resulting from local cartels or collusion among bidders include:

Fraud
Other signs of corruption include:

Countermeasures to Corruption
Contractors can use these countermeasures when approached for bribes: