A kickback is a form of negotiated bribery
in which a commission
is paid to the bribe-taker in exchange for services rendered. Generally speaking, the remuneration (money, goods, or services handed over) is negotiated ahead of time. The kickback varies from other kinds of bribes in that there is implied collusion
between agents of the two parties, rather than one party extorting
the bribe from the other.
[Wrage, Alexandra Addison. ''Bribery and Extortion: Undermining Business, Governments, and Security.'' Westport, Conn.: Praeger Security International, 2007. p. 14.]
The purpose of the kickback is usually to encourage the other party to cooperate in the illegal scheme.
[Kranacher, Riley, and Wells, p. 387.]
The term "kickback" comes from colloquial English language
, and describes the way a recipient of illegal gain "kicks back" a portion of it to another person for that person's assistance in obtaining it.
[Campos, p. 299.]
Types and methods
The most common form of kickback involves a vendor submitting a fraudulent
or inflated invoice (often for goods or services which were not needed, of inferior quality, or both), with an employee of the victim company assisting in securing payment. For his or her assistance in securing payment, the individual receives some sort of payment (cash, goods, services) or favor (the hiring of a relative, employment, etc.).
"Kickback brokers" are individuals who may not receive the kickback personally, but who help link the individual or company providing the goods or services with individuals capable of assisting with the illegal payments. For helping to link the two colluding parties, either or both parties may make a payment to this "broker".
Kickbacks are one of the most common forms of government corruption.
In some cases, the kickback takes the form of a "cut of the action," and can be so well known as to be common knowledge—and even become part of a nation's culture. For example, in Indonesia
, President Suharto
was publicly known as "Mr. Twenty-Five Percent" because he required that all major contracts throughout the nation provide him with 25 percent of the income before he would approve the contract. And, in Pakistan
, President Asif Ali Zardari
was publicly known as "Mr. Ten Percent" for the same reason, which later became hundred percent. After coming into the government, he started taking 10% of all major contract investments before he would approve the contract.
However, kickbacks differ from other forms of corruption, such as diversion of assets, as in embezzlement
, because of the collusion between two parties.
Kickback schemes can be pervasive. For example, in the United States
, companies providing medical services to Medicare
patients were paying doctors to send patients to them, whether the patient needed the treatment, diagnosis, or test or not. In 1987, the United States Congress
passed the stringent Anti-Kickback Enforcement Act
to prevent such schemes.
[Buchbinder and Shanks, p. 365.]
In Italy, the political scene was realigned dramatically by the ''Tangentopoli
'' scandals in the 1990s, which uncovered widespread use of kickbacks in the national and local governments.
* Anti-competitive practices
* Bid rigging
* Charbonneau Commission
* Conflict of interest
*Albrecht, W. Steve; Albrecht, Conan C.; Albrecht, Chad O.; and Zimbelman, Mark F. ''Fraud Examination.'' Mason, Ohio: Cengage Learning, 2012.
*Buchbinder, Sharon B. and Shanks, Nancy H. ''Introduction to Health Care Management.'' Boston: Jones & Bartlett, 2007.
*Campos, Jose Edgardo. The Many Faces of Corruption: Tracking Vulnerabilities at the Sector Level
'' Washington, D.C.: World Bank, 2007.
*Kranacher, Mary-Jo; Riley, Richard; and Wells, Joseph T. Forensic Accounting and Fraud Examination
'' Hoboken, N.J.: Wiley, 2010.