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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 scheme.Kranacher, Riley, and Wells, p. 387. The term "kickback" comes from colloquial
English language English is a West Germanic language of the Indo-European language family, with its earliest forms spoken by the inhabitants of early medieval England. It is named after the Angles, one of the ancient Germanic peoples that migrated to the ...
, 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".


In government

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 Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania between the Indian and Pacific oceans. It consists of over 17,000 islands, including Sumatra, Java, Sulawesi, and parts of Borneo and New Gui ...
, 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. Also, in
Pakistan Pakistan ( ur, ), officially the Islamic Republic of Pakistan ( ur, , label=none), is a country in South Asia. It is the world's List of countries and dependencies by population, fifth-most populous country, with a population of almost 24 ...
, President Asif Ali Zardari was publicly known as "Mr. Ten Percent" a similar reason; 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 The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
, 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 The United States Congress is the legislature of the federal government of the United States. It is Bicameralism, bicameral, composed of a lower body, the United States House of Representatives, House of Representatives, and an upper body, ...
passed the stringent Anti-Kickback Enforcement Act to prevent such schemes. In
Italy Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical ...
, 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.


See also

*
Annates Annates ( or ; la, annatae, from ', "year") were a payment from the recipient of an ecclesiastical benefice to the ordaining authorities. Eventually, they consisted of half or the whole of the first year's profits of a benefice; after the appropr ...
* Anti-competitive practices * Baksheesh * Bid rigging * Charbonneau Commission * Conflict of interest * Fraud * Kickbacks * Tangentopoli


References


Bibliography

*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. {{Corruption Bribery Contract law