THE LAW RELATED TO FRAUD

Question 2

Misrepresentation of material facts

Answer 2

Deliberate making of false statements to induce the intended victim to part with money or property, normally include:
• a material false statement
• knowledge of its falsity
• reliance on the false statement by the victim
• damage suffered

Question 3

Concealment of material facts

Answer 3

• That the defendant had knowledge
• of a material fact
• that the defendant had a duty to disclose
• and failed to do so• with the intent to mislead or deceive the other party

Question 4

Fraud

Answer 4

All multifarious means which human ingenuity can devise, and which are resorted to by one individual to get an advantage over another by false suggestions or suppression of truth. It includes all surprise, trick, cunning or dissembling, and any unfair way by which another is cheated

Question 5

Official bribery

Answer 5

Illegal payments to public officials, elements
\:• giving or receiving 
• a thing of value
 • to influence
• an official act

Question 6

Commercial bribery

Answer 6

• giving or receiving
• a thing of value
• to influence
• a business decision
• without the knowledge or consent of the principal

Question 7

Proof of corrupt influence

Answer 7

Involves demonstration that the person receiving the bribe favorited the bribe-payer in some improper or unusual way It is not necessary, however, that the prosecution or plaintiff demonstrate that the bribe-taker acted improperly; a bribe might be paid to induce an official to perform an act that otherwise would be legal, or an act that the official might have performed without a bribe.

Question 8

Bribery

Answer 8

Form of corruption that may be defined as the offering, giving, receiving, or soliciting anything of value to influence an act or decision

Question 9

Proof of corrupt influence

Answer 9

Involves demonstration that the person receiving the bribe favorited the bribe-payer in some improper or unusual way

Question 10

Conflict of interest

Answer 10

Occurs when an employee has an undisclosed personal or economic interest in transaction; elements of a typical civil claim for conflict of interest include:
• an agent taking an interest in a transaction
•that is actually or potentially adverse to the principal
•without full and timely disclosure to and approval by the principal

Question 11

Embezzlement

Answer 11

The wrongful appropriation of money or property by a person to whom it has been lawfully entrusted, elements are:
• the defendant took or converted
• without the knowledge or consent of the owner• money or property of another
• that was properly entrusted to the defendant

Question 12

Extortion

Answer 12

Obtaining of property from another with the other party’s “consent” having been induced by wrongful use of actual or threatened force or fear

Question 13

Theft

Answer 13

Wrongful taking of money or property of another with the intent to convert or to deprive the owner of its possession and use

Question 14

Duty of loyalty

Answer 14

Requires that the employee/agent act solely in the best interest of the employer/principal, free of any self-dealing, conflict of interest , or other abuse of the principal for personal advantage

Question 15

Duty of care

Answer 15

People in a fiduciary relationship, must conduct business affairs prudently with the skill and attention normally exercised by people in similar positions

Question 16

The organization for economic co-operation and development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

Answer 16

requires, among other things, that signatories establish in their domestic law the criminal offense for the bribery of a foreign public official

Question 17

United Nations Convention Against Corruption

Answer 17

Legally binding multilateral anti-corruption treaty. The UNCAC covers five main areas: (1) prevention, (2) criminalization and law enforcement measures, (3) international cooperation, (4) asset recovery, and (5) technical assistance and information exchange. In general, it requires signatories to take effective measures to prevent and criminalize corruption in the private sector.

Question 18

Inter-American convention against corruption goal

Answer 18

To make every effort to prevent, detect, punish, and eradicate corruption in the performance of public functions and acts of corruption specifically related to such performance

Question 19

In most instances, only false representations of _____may be prosecuted.

Answer 19

“presently existing facts”

Question 20

For example, an accountant may be liable for misrepresentation if he does any of the
following:

Answer 20

• Certifies that a financial statement fairly presents the financial condition of the audited company when the accountant knows it does not
• Falsely states that the audit was conducted in accordance with generally accepted accounting principles
• Deliberately distorts the audit results

Question 21

In bribery schemes, the thing of value is

Answer 21

Any tangible benefit given or received with the intent to corruptly influence the recipient may be an illegal
payment. Courts have held that such things as lavish gifts and entertainment, payment of travel and lodging expenses, payment of credit card bills, “loans,” promises of future employment and interests in businesses can be bribes if they were given or received with the intent to influence or be influenced.

Question 22

The big difference between a bribe and an illegal gratuity is

Answer 22

that an illegal gratuity charge does not require proof that the gratuity was given for the purpose of influencing an official act. In other words, an illegal gratuity charge only requires that the gratuity be given for or because of an official act.

Question 23

An agent includes any person who

Answer 23

under the law, owes a duty of loyalty to another, including officers, directors, and employees of a corporation, public officials, trustees, brokers, independent contractors, lawyers and accountants.

Question 24

Situations that might give rise to a conflict of interest include:

Answer 24

• Where the interests of an employer are directly or indirectly affected or likely to be affected in some negative way by the private actions of an employee.
• Where private activities of employees impair their ability to pursue the interests of their
employer.
• Where the private activities of employees compromise the business interests of their
employer.
• Where private activities of employees leave them in a position of gain or potential gain at
the expense of their employer.
• Where employees use knowledge or information imparted to them on the job to pursue
their own private interests.

Question 25

Fiduciary Duty

Answer 25

People in a position of trust or fiduciary relationship, such as officers, directors, high-level employees of a corporation or business, agents and brokers, owe certain duties imposed by law to their principals or employers. The principal fiduciary duties are loyalty and care.

Question 26

A breach of duty of loyalty is ___ to prove than fraud

Answer 26

easier The plaintiff does not need to prove criminal or fraudulent intent or the other elements of fraud. To prevail, the plaintiff must show only that the defendant occupied a position of trust or fiduciary relationship and that the defendant breached that duty to benefit personally.

Question 27

Business Judgment Rule

Answer 27

protects corporate officers and directors from liability for judgments that were made in good faith (e.g., free of self-dealings or conflicts) and that appeared to be prudent based on the then-known circumstances.

Question 28

Breach of Fiduciary Duty Claim

Answer 28

A breach of fiduciary duty claim is a civil action. The plaintiff may receive damages for lost profits and recover profits that the disloyal employee earned—in some instances, even the salary paid to the employee or agent during the period of disloyalty. The plaintiff may recover profits earned by the disloyal agent even if the principal did not suffer an actual loss. The plaintiff may also void any contracts entered into on its behalf that were the result of or were influenced by the employee’s or agent’s disloyalty

Question 29

Council of Europe

Answer 29

In 1998, the COE adopted an anti-corruption convention with criminal sanctions, and in 1999, it adopted an anti-corruption convention that provided civil remedies. The COE conventions establish regional accord relating to standards for criminalization, civil remedies, and enforcement of corruption offenses.

Question 30

African Union Convention on Preventing and Combating Corruption

Answer 30

In 2003, the African Union (AU), a pan-African convention, adopted the Convention on Preventing and Combating Corruption in 2003 (AU Convention). Establishing regional consensus regarding standards for preventing, criminalizing, cooperating internationally, and recovering assets, the AU Convention provides a comprehensive framework and covers a range of corruption related offences.

Question 31

All signatories to the OECD Anti-Bribery Convention also agreed to implement

Answer 31

Revised Recommendation on Combating Bribery in International Business Transactions (Revised Recommendation) that includes the elimination of the tax deductibility of bribes, and bribing a foreign public official is a crime in the countries that have ratified the OECD Anti-Bribery Convention.

Question 32

The OECD Anti-Bribery Convention sets forth the essential elements of a foreign corrupt practices statute that

Answer 32

each signatory country is obligated to enact into law.

Question 33

Bribery is defined by the Convention as

Answer 33

he offering, promising, or giving of something in | order to influence a public official in the execution of his official duties

Question 34

ribes can take the form of (OECD Anti-Bribery Convention)

Answer 34

money, other pecuniary advantages, such as a membership in an exclusive club or a promise of a scholarship for a child, or non-pecuniary dvantages, such as favourable publicity.

Question 35

The OECD Anti-Bribery Convention requires that each Party establish

Answer 35

the criminal offense of bribery of foreign public officials and further establish the liability of enterprises for the offense

Question 36

Countries that ratified the OECD Anti-Bribery Convention have agreed to establish the offence of bribing a foreign public official in the following manner:

Answer 36

• It must apply to all persons and to the offering, promising, or giving of a bribe. It is an offence regardless of whether the offering, promising, or giving of a bribe is done through an intermediary and regardless of whether the advantage is for a foreign public official or a third-party. • It must apply regardless of the form that the bribe takes. Thus, the offering of an advantage that is tangible or intangible as well as pecuniary or non-pecuniary must be prohibited. • It must prohibit bribery for the purpose of obtaining or retaining “business or other improper advantage in the conduct of international business.” This is not limited to the procurement of contracts, but also includes the obtaining of regulatory permits and preferential treatment in relation to taxation, customs, and judicial and legislative proceedings. It is irrelevant that the person concerned was the best-qualified bidder or could properly have been awarded the business. And it is an offence irrespective of “the value of the advantage, its results, perceptions of local custom, the tolerance of such payments by local authorities, or the alleged necessity of the payment.” • A “foreign public official” must include any person holding a legislative, administrative, or judicial office of a foreign country, whether appointed or elected; any person exercising a public function for a foreign country, including for a public agency or public enterprise; and any official or agent of a public international organisation.

Question 37

Each Party must also satisfy the following requirements under the OECD Anti-Bribery Convention:

Answer 37

• Establish effective, proportionate, and dissuasive criminal penalties for the foreign bribery offence. • Where a Party’s legal system does not apply criminal responsibility to enterprises, they shall be subject to effective, proportionate, and dissuasive non-criminal penalties for the offence. • Establish its jurisdiction over the foreign bribery offence when the offence is committed in whole or in part in its territory. Where a Party has jurisdiction to prosecute its nationals for offences committed abroad, it shall establish such jurisdiction over the foreign bribery offence according to the same principles. • Where a Party has established a money laundering offence in relation to the bribe and/or proceeds of domestic bribery, it shall do so on the same terms for foreign bribery. • Prohibit the following accounting and auditing practices: the establishment of off-the- books accounts, the making of off-the-books or inadequately identified transactions, the recording of non-existent expenditures, the entry of liabilities with incorrect identification of their object, as well as the use of false documents, by companies subject to those laws and regulations, for the purpose of bribing foreign public officials or of hiding such bribery. • Provide prompt and effective legal assistance to other Parties seeking assistance in the investigation and prosecution of foreign bribery offences. In addition, the bribery of a foreign public official shall be deemed to be an extraditable offence under the laws of the Parties and the extradition treaties between them.

Question 38

Additionally, to comply with the Revised Recommendation, Parties commit themselves to the following measures for deterring, preventing, and combating international bribery:

Answer 38

* Encouraging the introduction of sound internal company controls, including standards of conduct and controls applicable down to the operational level. In the area of public procurement, companies responsible for bribing foreign public officials should be suspended from future public contract bids. * Requiring that anti-corruption provisions be included in bilateral, aid-funded procurement, promoting the proper implementation of anti-corruption provisions in international development institutions, and working closely with development partners to combat corruption in all development cooperation efforts.

Question 39

The OECD Anti-Bribery Convention and the Revised Recommendation are enforced through a program of systematic follow up to monitor and promote their full implementation. This is essentially accomplished through a peer-review process involving two evaluative phases.

Answer 39

Phase 1 involves an examination of the relevant laws and secondary legal sources of each Party to determine whether they conform to the requirements under the OECD Anti-Bribery Convention. Phase 2 focuses on the application of the laws in practice. It studies the structures put in place to enforce the laws and rules implementing the OECD Anti-Bribery Convention and to assess their application in practice. Phase 2 broadens the focus of monitoring to encompass more fully the non-criminal law aspects of the Revised Recommendation.

Question 40

The OECD Guidelines for Multinational Enterprises are

Answer 40

a set of non-binding recommendations providing voluntary principles and standards designed to promote corporate transparency and accountability.

Question 41

The introductory sentence of the sixth chapter, the OECD Guidelines for Multinational Enterprises broadly define bribery, stating:

Answer 41

“Enterprises should not, directly or indirectly, offer, promise, give, or demand a bribe or other undue advantage to obtain or retain business or other improper advantage.”

Question 42

``` As the identity of the other party involved in the bribery act is not specified, this party can therefore be (OECD Guidelines for Multinational Enterprises) ```

Answer 42

a public official, a business person, or a political party official.

Question 43

OECD Guidelines for Multinational Enterprises do not cover bribery practices which are

Answer 43

not for obtaining or retaining business or other improper advantage: this means that facilitation payments are excluded.

Question 44

In particular, enterprises should(OECD Guidelines for Multinational Enterprises):

Answer 44

1) Not offer, nor give in to demands, to pay public officials or the employees of business partners any portion of a contract payment. They should not use sub-contracts, purchase orders, or consulting agreements as means of channelling payments to public officials, to employees of business partners or to their relatives or business associates; and 2) Ensure that remuneration of agents is appropriate and for legitimate services only.