Fraud and Fraud Detection: A Data Analytics Approach, + Website

CHAPTER 14 Corruption

WHEN MOST PEOPLE THINK OF CORRUPTION, bribery usually comes to mind. While bribery is the most common of corruption schemes, corruption also includes extortion, illegal gratuities, and conflict of interest.

Corruption is where someone using the role of an employee colludes with a third party where the employee obtains a benefit. The major difference between corruption and other fraud schemes from a data analytical perspective is that the benefit is not recorded in the business system records. It is completely off the books of the organization that the employee works for.

BRIBERY

The most common corruption scheme is bribery. It is given to influence a decision or act to occur. It may be given ahead or after the act has occurred. The technical definition of bribery is restricted to that of influencing public officials. We will use the term bribery to include situations where employees of commercial enterprises influence business decisions. Bribes are given to the employees to obtain an advantage over others. Therefore not only will the organization suffer losses that may include excessive pricing and lower quality products, but competitors of the briber also suffer from their loss of business opportunities. Losses for the employee’s organization are usually not immediate. There is no theft of assets or anything tangible from the organization so there is ...