We read and hear accounts of corruption or 'grifting' behavior by government officials at any level; and, it can be hard to connect the dots and see the unethical and/or criminal acts.
To understand 'grifting', I will start with an honest or non-criminal action by a government. We all expect that governments behave legally and honorably, so what exactly does that behavior look like?
Suppose a government wants to fix a bridge used by thousands of people every day because the Civil Engineers' report says the bridge is unsound and can fall into the river at any moment killing hundreds of people.
The sensible thing to do is to fix the bridge, save lives and avoid lawsuits.
An honest government will have a list of pre-approved contractors for this type of work who are experienced and financially sound. The contractors will be private businesses since that is how our system works most of the time - except when the Army Corps of Engineers is involved.
Government will issue an RFP [Request for Proposal] which is detailed and lists exactly what needs to be done. Then the project goes out to bid to the pre-approved list.
Government will open all the bids in a public meeting. The job will be awarded to the low bidder in a public announcement.
In addition, the contract calls for an initial payment and progress payments throughout the process. A progress payment is earned when an inspector certifies that some part of the work is done correctly. After a few progress payments, the job is ready for final inspection. Usually there is also holdback amount of money around 10% of the contract total. That cash is held until the final inspection to ensure that the job is done correctly.
That is what we expect in government jobs - we just assume that will happen all the time.
Now, let us see some of the ways it can go wrong.
Suppose a grifter want to get the bridge repair contract. After all, it is $10 million!
Problem is that our grifter is not a contractor; so, he will find a contractor who is willing to play ball and offer him 10% of the payment.
Since the contractor is not qualified for the pre-approved list, our grifter goes to the person who approves contractors for the list and gives him an offer he cannot refuse: Take $10,000 to put my guy on the list, or I will kill you and your family.
Once that is done, now the grifter has to change the RFP. He modifies the RFP to provide an upfront payment of $ 5 million with the balance due on completion. Of course, he and his guy will take the $ 5 million and disappear. They will be happy with the $ 5 mil.
Government awards contract to our guy with no public announcement to avoid awkward questions. Any government official who wants to go public gets an offer he cannot refuse to keep it quiet.
Of course, the grifters will not do any actual work; they will just hire a person to paint over a few things on the bridge so it looks like the work is being done; that way, no press or public will notice for a while. The public has a short attention span, so when the work is not done and the contract canceled, the public will just say 'That's the government for you!'
Or, here's a professional or Russian example: For the bridge repair above, Government awards the contract to a close friend for $100 million with no bidding or announcement. The work is done well and the grifter and the contractor split the extra $90 million.
Here's another kind of grift.
Suppose a grifter has routine press conferences and also has many rich friends. Maybe one of his buddies runs a public corporation that is in the news a lot. Our grifter makes a proposal to the CEO:
'Here is what we will do. Next week I announce that your company will be investigated for illegal activity. Your share price will drop like a stone. Three weeks from now, I will announce the investigation has been dropped since there was no evidence. Your share price will rebound. So, you sell all your 100 million shares today, and then buy them back at the bottom in three weeks. When the price rebounds, you sell 100K shares and give me the proceeds. Deal?? Great.'
It requires a lawyer to determine if the action is unethical or criminal.
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