Kickbacks

The money flows back along the same path as the deal. A supplier wins an order, is paid, and then passes a slice of the proceeds to the buyer's employee or official who chose it. Often the price is inflated to cover the cost, so the buyer ends up funding its own corruption. Kickbacks can be disguised as consulting fees, rebates, commissions to a related company or payments to a relative. They appear in public contracting, healthcare referrals, construction and supplier selection, and are an offence under bribery, fraud and, in some countries, specific statutes covering healthcare programmes. Signs include invoices above market rates, a favoured supplier that wins repeatedly, close personal ties between a buyer and a seller, and payments to unexplained third parties. Audit teams find them by comparing prices paid with market quotes, then following where the supplier's own payments went.

At one hospital, the purchasing manager always orders consumables from a single vendor, even though cheaper quotes exist. An internal audit compares unit prices and finds they are 20% above market. Bank records later show the vendor paying monthly amounts to a company owned by the manager's spouse. The hospital treats it as a kickback scheme, dismisses the manager and reports the matter to the authorities.