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Games Contractors, Subs and Owners Play: Bribery

It is a game almost older than dirt, a “table stakes” game. Every contractor or sub has been tempted to play the game at one time or another to win a project. It is commonly known as “the grey bag,” or “this is the way it is played here,” or “I know that you are not the lowest, but…” or “if you will hire this consultant on the project, I will guarantee that you will get it,” or “if you will hire my cousin’s company as a sub on this project or that one, then I will help you get the project.”

The legal profession knows it as “bribery” and even though it continues on projects around the country, the downside risk if you play is considerable.

Two recent examples caught our eye. The first was reported in the Houston Chronicle. It involves a former Houston Independent School Board member and Chairman who, along with his co-defendants, were convicted of “tortious interference in a business relationship, bribery, conspiracy and a violation of the RICO statutes." The game involved collusion among the trustee, a contractor and a “consultant” to block the plaintiff’s attempts to get work from the school district. The game was that in order to get work, the bidder had to hire the consultant and pay fees. A major portion of the fees paid were funneled back to the Trustee who ensured that the plaintiff was blocked from the award and ensured that the contractor co-defendant was the winner. The jury in Federal court found the defendants guilty and awarded around $4 million to the plaintiff.

The second example is on-going in Atlanta where, according to a post by Kim Slowery in Construction Dive, the owner of a large minority construction firm has been arraigned for allegedly bribing an individual $1 million with the intent of that money being distributed to several other City officials to procure City of Atlanta contracts for the minority firm.

As reported in the Atlanta Journal Constitution:

According to a statement from the Department of Justice, Mitchell (the contractor) believed some of that money would be paid to city officials who “exercised influence over the contracting process.” The scheme, which also involved another person in the construction industry, allegedly took place between 2010 and 2015.

“Mitchell brazenly sought to buy government contracts,” said U.S. Attorney John A. Horn. “Contractors who bribe their way into public work undermine the integrity of the system and ultimately cost taxpayers more money to get important projects done.”

The plaintiff in this case is reportedly expected to plead guilty to those charges later this month.

These are Federal violations and under the new Trump Administration, the penalties for playing the bribery game will likely become more punitive since the President has probably been invited to play the game more than once on his developments around the globe.