AMERICAN investigators have detected a pattern of foreign firms using bogus business consultants to facilitate bribery and corruption abroad, including Nigeria, where official sources indicated that most of the over 100 cases being probed by the U.S. government are found.
Sources close to the United States (U.S.) Justice Department disclosed that “Nigeria is the one single nation that has come up the most in the probes set up by the American government based on the Foreign Corrupt Practices Act (FCPA).”
The source, who is involved in the FCPA probes, added that after Nigeria, China and Iraq also featured most in the act.
It was also disclosed that the initial statement of defence of some foreign company officials accused of offering bribes in Nigeria was that Nigerian government officials were responsible for asking for the bribes through third parties with a subtle threat that business would not be done otherwise.
That is how, according to the sources, the system of bogus third party business consultants emerge, who get paid for doing nothing since they are meant to distribute the bribes to the local officials.
In a few other cases, like Siemens, however, the German firm came into Nigeria with its own well-established culture of corruption, U.S. investigators asserted.
But the American government has been known to insist that foreign companies must carry out their due diligence before entering into transactions abroad. And the U.S. has a hold on the foreign firms because the companies have at least a branch in the U.S.
The pattern of such bribery cases in Nigeria as in other foreign countries are now becoming clearer to U.S. investigators who have observed that in Nigeria and the other countries, the foreign firms involved and their local collaborators use consultants to conceal the bribes paid out.
Investigators said that in the last two celebrated cases regarding Nigeria, the use of consultants came in very handy to perpetuate the bribery for several years. For instance, in the Willbros scandal, consultants were used by the U.S. based firm to bribe top Nigerian officials both at the Nigerian National Petroleum Corporation (NNPC), the ruling party, Peoples Democratic (PDP) and leading members of the executive arm of government.
It was also revealed that in the most recent case of Siemens, the strategy of using consultants to facilitate graft to Nigerians and other foreign government officials was also well- established. For instance, the investigators said in recent court papers that “Siemens made thousands of payments to third parties in ways that obscured the purpose for, and ultimate recipient of the money.”
The investigators added that “the principal mechanisms used to facilitate illicit payments were business consultants, payment intermediaries, slush funds, cash and inter-company accounts”
In the Siemens’ saga, the U.S. authorities stated that the German firm funnelled over $982.7 million to such consultants, who were hired for seeming legitimate consulting services based on agreements, but in reality, the agreements were just “shams in that the business consultants performed no services beyond funnelling bribes.”
Investigators added that the foreign companies who engage in this bribery do everything possible to conceal the process. For instance, Siemens issued specific instructions “on how to use a confidential payment system to conceal payments to business consultants.”
It was also learnt that the U.S. law, FCPA, was essentially in two parts-anti-bribery laws and laws regulating proper financial books and records. But the investigators added that most of the graft that go on between the foreign companies and the local officials are carried out not by directly violating the anti-bribery sections of the FCPA, but the books and records sections of the law.
The payment to consultants, clearing agents, customs officers, tax officials, local content business partners are all the ways in which the violations of the U.S. law are detected by the investigators.
Other strategies used to perpetrate the bribery, apart from the use of consultants, included existence of slush funds which were bank accounts held in the name of either current or former company officials.
In the case of Siemens, saga according to the U.S. investigators, the communications divisions that did business in Nigeria maintained the most notable slush funds in the German firm. But the former Siemens official who held the funds have been recently convicted in Germany.
Raw cash and inter-company payments were also used to facilitate the bribery.
The investigators said, the German outfit “used cash and cash equivalents to funnel more than $160.4 million to third parties…Siemens employees used cash desks maintained by the Siemens Real Estate Group to obtain large amounts of cash to pay bribes.”