Keeping Client Negotiations Above the Table

Wed, 05 Mar 2008 17:02:00 GMT

This decision was first reported a few weeks ago, but it’s a valuable lesson in dealing with clients, both public and private.

Brent Wilkes, a defense contractor, was sentenced to 12 years in federal prison for bribing former Rep. Randy "Duke" Cunningham with cash, trips, the services of prostitutes, and other gifts in exchange for $87 million in Pentagon contracts. Wilkes, 53, was convicted in November on 13 counts of bribery, conspiracy, and wire fraud.

Wilkes blamed wrongdoing on others, particularly his former employee Mitchell Wade. Wade admitted in 2006 to giving Cunningham more than $1 million in kickbacks for about $150 million in government contracts. Wade awaits sentencing for his conviction.

Whether or not Wade was guilty of all of the illegal bribes to Cunningham still does not relieve Wilkes of wrongdoing. In a design professional firm, principals must be aware of all employee relationships with client s. And if there is any chance that something inappropriate took place firm management should conduct an internal investigation right away. Inaction by the firm could lead to allegations that the firm sanctioned the illegal activities.

Bribery laws both in the U.S. and abroad are strict and usually result in either hefty fines or jail time, sometimes both. In the international market, bribing a foreign official is a violation of the U.S. Foreign Corrupt Practices Act (FCPA). According to the FCPA statute, “corporations and other business entities are subject to a fine of up to $2,000,000; officers, directors, stockholders, employees, and agents are subject to a fine of up to $100,000 and imprisonment for up to five years. Moreover, under the Alternative Fines Act, these fines may be actually quite higher—the actual fine may be up to twice the benefit that the defendant sought to obtain by making the corrupt payment.”

As is the case with all risk exposures, the risk of getting caught bribing a public official, and all related punishments, far outweigh the benefits in getting projects, no matter how many millions in fees they generate.

Schinnerer's RM Blog - contractor tag

Keeping Client Negotiations Above the Table