Construction Law

Kickbacks and the Construction Industry featured image

Kickbacks and the Construction Industry

According to the International Anti-Corruption Resource Center (IACRC), “A ‘kickback’ is a bribe paid incrementally by the contractor as it is paid.” Plainly stated, if a contractor is eager to take on a public project in hopes that it will be a profitable endeavor, they may attempt to sway the entity awarding the bid by promising kickbacks that put money in the pocket of the individual in charge.

Kickbacks are a form of fraud, and contractors caught engaging in these types of shady deals could be incarcerated. Our country invests billions annually to combat fraud, so when an individual is charged, penalties can be extremely severe. Federal charges can carry a prison sentence of 10 years or more. Other penalties include probation, fines, and restitution. At Cotney Attorneys & Consultants Law, our lawyers can protest a bid that has been awarded to a party that you believe is engaging in fraudulent activity. In this article, a construction lawyer in Clarksville, TN, will discuss everything contractors need to know about kickbacks in the construction industry.

Types of Kickbacks

Money doesn’t necessarily have to be transferred between two parties for a kickback to take place. Kickback payments can come in a variety of forms both traceable and untraceable. Cars, vacations, extravagant meals, unpaid loans, opening a line of credit, and even employment-related promises can constitute a kickback. This is where things get tricky. Cash payments are almost impossible to trace, as are dinners and vacations. In many cases, suspicion of fraudulent activity relating to one of your competitors will require the help of a construction attorney in Clarksville, TN to bring the story full circle. 

Are Bribes and Kickbacks the Same Thing?

Bribes and kickbacks are very similar. The main differentiator is that a kickback is typically spread out over multiple increments to help obscure the fact that fraudulent activity is taking place. A bribe is more likely to be a one-time deal, but this doesn’t always have to be the case. What’s important is that you avoid engaging in bribes or kickbacks when bidding on public projects. The telltale signs of bribes and kickbacks include:

  • Illogical contractor selection
  • Apparent financial favoritism
  • Middlemen being used to broker transactions that shouldn’t require one in the first place
  • Acceptance of gifts, entertainment, or other tangible and intangible things of value
  • Procurement officers suddenly gaining access to increased financial resources

Kickback Laws

There are numerous laws in the United States designed to prevent kickbacks, including:

  • The Copeland Anti-Kickback Act: supplementary law that, when paired with Davis-Bacon Act of 1931, prevents contractors and subcontractors from requesting an employee relinquish part of their compensation despite the terms of their employment contract.
  • The Anti-Kickback Act of 1986: updated anti-kickback legislation to close loopholes involving government contractors and project procurement. It also helped clearly define what a kickback entails.
  • Federal Anti-Kickback Statute (AKS): makes it illegal for one party to pay extra to expedite a transaction.

If you would like to speak with a construction law attorney in Clarksville, TN, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.