Tim F
 |
In a true "kickback" arrangement, a seller "kicks back" some of the sales proceeds to the buying company's agent. The buyer's agent demands and/or accepts the money as a condition for steering the deal to the seller, and, of course, the buying company doesn't know that its own employee or agent is getting this money.
Kickbacks are akin to but not exactly the same as "bribes", "finder's fees", and "commissions".
In many (most) countries of the world, "kickbacks" are routine, expected and legal, even if not quite ethical. In such countries, sellers know that they will make no sales unless a portion of the price is kicked back to the buyer's agent, and buyer-companies know that their employees and agents are soliciting and accepting kickbacks.
Some kickback arrangements are illegal in some countries of the world. In the U.S., three types of kickbacks are illegal in almost all circumstances.
(1) It is illegal for a publicly traded company to pay kickbacks that are deducted for U.S. tax purposes. In practical effect, this means that publicly traded companies cannot legally pay kickbacks in foreign countries, even if kickbacks are legal and necessary in those foreign countries.
(2) It is illegal for an employer to accept kickbacks from employees. Although it is illegal, it is an unfortunate fact that many employees are forced to pay kickbacks to their bosses just to get and keep a job in the U.S.
(3) It is illegal for any public official to solicit or accept kickbacks and/or bribes.
Most people are surprised to learn that, even in the U.S., most kickback arrangements are not illegal, even if they are immoral / unethical / civilly wrongful and tortious / etc. In other words, if a buyer's employee or agent gets caught accepting kickbacks, the person will be fired and probably sued for damages, but the person won't face jail because it's usually not a crime, except for the Big 3 named above.
Hope this helps. |
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