The Foreign Service Journal, November 2004

cially when the contract is large enough to bring in a lot more rev- enue. However, open-ended con- tracts, such as the cost-plus arrange- ments that Bechtel and Halliburton have negotiated in Iraq, do not lend themselves to this tactic. But compa- nies seeking illegal profits still have several options involving price and reimbursement. One is to buy a receipt from a sup- plier who either never provided any good or service whatsoever, or who did, but at a much lower price. Let’s say you want a receipt for $100,000 from someone who never did any- thing. In the Third World, the going rate is 10 to 15 percent of the amount of the projected invoice. The compa- ny pays a $10,000 to $15,000 fee to the supplier, the company get its invoice, and pockets the $85,000 to $90,000 difference. These deals are usually meticulously documented with contracts, receipts, invoices, work progress reports, meetings that did not occur or that did occur to structure the fraud, etc. Why go to so much trouble? Accountants working for aid agencies focus on a paper trail, so the intelli- gent thief gives them what they want. You rarely see an accountant who really wants to go out to the hot, dirty, dangerous construction site and see the actual yards of poured concrete compared to what is on the invoice. If the accountants do decide to run a 56 F O R E I G N S E R V I C E J O U R N A L / N O V E M B E R 2 0 0 4 Contractors know that government agencies are highly reluctant to change horses in midstream.