CFA CFA Corruption & Bribery Schemes 1 — Questions and Answers
Question 1: Under the Foreign Corrupt Practices Act (FCPA), it is illegal for U.S. companies to bribe:
- Private sector competitors
- Foreign government officials to obtain or retain business (Correct answer)
- Domestic government employees for any reason
- Foreign private sector employees in most circumstances
Correct answer: Foreign government officials to obtain or retain business
The FCPA prohibits U.S. persons and companies from paying, offering, or authorizing payments to foreign government officials to obtain or retain business advantages.
Question 2: A kickback scheme differs from a bribery scheme primarily in that kickbacks:
- Are always initiated by the payer
- Involve a payment made in return for a benefit already received, often by a vendor to a purchasing employee (Correct answer)
- Are legal in certain commercial contexts
- Require a written agreement between parties
Correct answer: Involve a payment made in return for a benefit already received, often by a vendor to a purchasing employee
Kickbacks are secret payments made by a vendor to an employee in exchange for directing business to that vendor, creating a corrupt quid pro quo.
Question 3: Which of the following is a PRIMARY red flag indicating a potential bribery scheme in procurement?
- A vendor consistently delivering goods on time
- A vendor winning multiple large contracts despite submitting higher bids than competitors (Correct answer)
- A purchasing manager taking vacations during contract periods
- Vendor invoices that match purchase order amounts exactly
Correct answer: A vendor winning multiple large contracts despite submitting higher bids than competitors
A vendor consistently winning contracts despite higher pricing suggests that non-price factors — potentially corrupt payments — are influencing the award decisions.
Question 4: The UK Bribery Act 2010 is considered stricter than the FCPA primarily because it:
- Only applies to public sector employees
- Covers commercial (private-to-private) bribery and imposes corporate liability for failure to prevent bribery (Correct answer)
- Requires a minimum bribe amount to trigger prosecution
- Applies only to UK nationals abroad
Correct answer: Covers commercial (private-to-private) bribery and imposes corporate liability for failure to prevent bribery
The UK Bribery Act covers both public and private sector bribery and creates a strict corporate liability offense for failing to prevent bribery by associated persons.
Question 5: An employee who accepts lavish gifts, meals, and entertainment from a vendor seeking a contract renewal may be engaging in:
- A conflict of interest that could constitute corruption (Correct answer)
- Legitimate relationship management within industry norms
- A violation only if the gifts exceed $500 in value
- A regulatory issue requiring SEC disclosure
Correct answer: A conflict of interest that could constitute corruption
Accepting gifts, meals, or entertainment of significant value from vendors can constitute a corrupt conflict of interest, especially when contract decisions are pending.
Question 6: What is 'bid rigging' in a corruption context?
- Submitting multiple bids under different company names
- Colluding with competitors to predetermine the winner of a competitive bidding process (Correct answer)
- Inflating bid estimates to create budget surplus
- Accepting bribes to disqualify a competing vendor
Correct answer: Colluding with competitors to predetermine the winner of a competitive bidding process
Bid rigging is a form of collusive fraud where competing bidders coordinate to control who wins a contract, eliminating genuine competition and violating antitrust laws.
CFA CFA Corruption & Bribery Schemes 1
Under the Foreign Corrupt Practices Act (FCPA), it is illegal for U.S. companies to bribe: