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ACCA Applied Skills · Corporate and Business Law (Global) · Fraudulent and criminal behaviour

Kestrel Ltd's sales director authorises a payment to a government procurement officer in another country so that Kestrel wins a public contract. The payment is described in the accounts as 'consultancy fees'. Which analysis is most accurate?

The payment is bribery of a public official to win business, and mislabelling it as consultancy fees may add false accounting liability. A fair price or the official being overseas does not make it lawful, and it is not merely a civil matter.

  1. AThe payment is bribery, and the false description may also create accounting or fraud-related offencesCorrect
  2. BThe payment is lawful if the contract is awarded at a fair price
  3. CThe payment is lawful because the officer is in another country
  4. DThe payment is only a civil matter between Kestrel and the officer

Explanation

Giving an advantage to a public official to obtain business is bribery, and anti-bribery laws commonly apply regardless of where the act occurs if the company has the necessary connection. A fair contract price is no defence. Describing the payment falsely as consultancy fees also falsifies records, adding further exposure.

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