Wednesday, March 4, 2015

Government Employees Accepting Bribes from Contractors

The Department of Justice (DOJ) announced yesterday that two Government employees (most likely "former" Government employees at this point) and a Government contractor were convicted by a Federal jury of bribery and fraud charges related to military trucking contracts. The magnitude of the fraud was staggering. Over a period of less than four years, the Government employees accepted $800 thousand in bribes in exchange for steering $37 million dollars in contracts to the trucking company. The two Government employees worked for DLA (Defense Logistics Agency) at the Marine Corps Logistics Base (MCLB) - Albany. The trucking company was also based out of Albany GA.

According to the press release, the company bribed the Government workers in order to obtain commercial trucking business from MCLB-Albany. The contracts however were loaded with plenty of "extras" including premium-priced requirements, expedited services, expensive trailers, and exclusive use that required freight be shipped separately from other equipment, even if it resulted in a truck not being filled to capacity. Sometimes shipments were delayed for a period of hours or days, thereby reducing the time available to fulfill the shipping request and assuring that a local trucking company would get the job. There was even "ghost shipments" where the contractor billed the Government for shipments that were never made.

The trucking company paid another $200 thousand in bribes to Government employees who used their positions to help steal more than $1 million in surplus equipment from the base, including bulldozers, cranes and front-end loaders. The employees removed the items from the surplus inventory list and arranged to have them transported off the base by the trucking company.

Like most of these DOJ press releases, there is no mention as to how the fraud was uncovered - which is too bad because knowing how the fraud was perpetrated would help companies establish internal control systems to help detect and prevent such things from happening in the first place. Contractors (and all companies for that matter) need to diligently monitor the effectiveness of their internal control systems to ensure that they are operating at peak efficiency.

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