FCPA reward whistleblowers should watch out for suspicious third parties. Technology, telecom, and communications (collectively “tech”) companies often bribe government officials via third-party suppliers and vendors. Tech companies use entities, such as advertising agents and marketing consultants, to provide kickbacks, gifts, trips, and entertainment to government officials and customer decision makers to win deals and tenders.
FCPA whistleblowers who report tech companies bribing government officials may be eligible for a reward under the Dodd-Frank reward program. Current and former tech employees, which includes current and former employees of tech distributors and resellers, are eligible for large rewards for reporting bribery confidentially to the U.S. Securities and Exchange Commission (SEC). In fact, almost anyone with knowledge of the tech sector can be a Dodd-Frank FCPA whistleblower. But to do so, it is important to understand how tech corruption schemes work and what information would be most helpful to regulators. This is part three in a series that examines international tech corruption and how to identify reward eligible information. Part one of the series examined how tech companies use channel partners to bribe officials to obtain business, and part two examined how tech companies use trips to bribe officials.
Tech companies and their channel partners often use third-party advertising and marketing consultants to funnel bribes to government officials. I have seen many examples where this has taken place in Russia/CIS, Asia, Latin America, and the Middle East. In many instances, these ad agencies are owned by government officials and/or their relatives. Typically, the advertising or marketing consultant will be engaged by tech’s marketing and communications department under the guise of organizing some event or performing “marketing research.”
Tech employees who work in procurement and purchasing should be alert to this type of corruption and check to see whether any third-party consultants were added to the approved vendor list prior to a deal or tender being won. Any recently added vendor or supplier that appears connected to a big tender could warrant further investigation and lead to a big reward if it turns out that the vendor was added as part of a scheme to bribe a government official or an official on the tender committee. Accounting and finance personnel should examine the costs connected to winning any large government deal or tender in order to assess whether any recently approved vendor or supplier received payments in connection with the deal. If so, this could be reward eligible information. If anyone has information about a tech company engaging in suspicious conduct and would like to discuss whether it might be reward eligible, please feel free to contact me for a free confidential consultation.