Discussion
OK, heres a question,
I was chatting with a mate today, he said that one of his business contacts and him have spoken in private saying that if he was to sort him out with an incentive (ie cash) he would give his company a potenitally huge contract. My mates company (only small)update and renew IT software for larger companies, so it could make him a lot of money, BUT i reckon and told him its dodgy as hell, could backfire on him maybe, or is this kinda stuff happening out there?
I was chatting with a mate today, he said that one of his business contacts and him have spoken in private saying that if he was to sort him out with an incentive (ie cash) he would give his company a potenitally huge contract. My mates company (only small)update and renew IT software for larger companies, so it could make him a lot of money, BUT i reckon and told him its dodgy as hell, could backfire on him maybe, or is this kinda stuff happening out there?
Offering "incentives" to suppliers etc is not actually illegal although it might be outside the rules set down by the relevant companies involved in the transaction - which could create an internal issue for either of the businesses.
In addition, either company's Memorandum and Articles of Association might prohibit such activity. If they did, the director or officer of the company who authotrised such a transaction could find that they had acted "ultra vires" (beyond their powers) and they could find themselves in trouble either with the shareholders of the company or BERR (formerly the DTI).
Finally, if there was an intention to hide this transaction from
a) other shareholders
b) the tax authorities
this then becomes a criminal fraud and the book would be thrown at the culprits when (not "if") they were found out.
In addition, either company's Memorandum and Articles of Association might prohibit such activity. If they did, the director or officer of the company who authotrised such a transaction could find that they had acted "ultra vires" (beyond their powers) and they could find themselves in trouble either with the shareholders of the company or BERR (formerly the DTI).
Finally, if there was an intention to hide this transaction from
a) other shareholders
b) the tax authorities
this then becomes a criminal fraud and the book would be thrown at the culprits when (not "if") they were found out.
It may be hard for him to say no in this climate however, it is basically a bribe to get an order.
We come across this every now and then, the last time one of our sales people agreed to this without letting the directors know.
We did not pay, we did not get anymore business and we all awake bright and fresh every morning with a clean conscience
Tell him to think about the TAX man, how will he explain this amount of money being paid out without an invoice, will the client pay tax on the bribe?
He would be breaking so many rules, too many to list here.
IMHO it’s a no no.
Eric Mc is correct, when (not if).
We come across this every now and then, the last time one of our sales people agreed to this without letting the directors know.
We did not pay, we did not get anymore business and we all awake bright and fresh every morning with a clean conscience
Tell him to think about the TAX man, how will he explain this amount of money being paid out without an invoice, will the client pay tax on the bribe?
He would be breaking so many rules, too many to list here.
IMHO it’s a no no.
Eric Mc is correct, when (not if).
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