You'll never catch Burgin," television investigative reporter Marsha Halford said to me during an off-camera interview regarding rumors of bribery in the Mississippi senate. "He is the smartest and most corrupt politician in the state."
The Federal Bureau of Investigation had Senator William G. Burgin Jr., chairman of the Mississippi State Senate Appropriations Committee, under scrutiny. As the agent in charge of the case, I wasn't allowed to answer her. But I knew something that Halford and even Burgin didn't know: We'd just about nailed him, and he wasn't very smart after all.
Within a month of that interview, Burgin was indicted for pocketing at least $83,000 in bribes. He later was convicted and served three years in federal prison. The Burgin investigation illustrates a checklist of classic lessons that CPAs can apply when confronted with allegations or suspicions of bribery.
RUMORS OFTEN ARE TRUE
Those who accept illegal payments usually have a motive for doing so. For most people, it is debt; but once they pay their debts, they end up spending the rest of the loot. Coworkers often notice extravagances and report them; CPAs should be alert to rumors or complaints about employees who seem to live beyond their means.
Burgin's lifestyle. For years Burgin--a part-time legislator--had one of the most successful solo law practices in Mississippi and lived the life of a wealthy plantation owner. Because of his visibility as a politician, people noticed his ostentatious wealth, and it was one of them who tipped the FBI off to his illegal scheme. Evidence later showed that one of the principal reasons for his "success" was that his firm served as a conduit for the lucre of corruption.
LOOK TO THE TOP
At some point, regardless of internal controls or safeguards, a person at the top of an organization has the ultimate authority to decide how it spends its money; lower-level employees must contend with restrictions. This means that within an entity the chief purchasing agent or similar officer would be the most likely suspect for corruption. CPAs therefore should satisfy themselves that controls over purchasing managers are adequate and are not being overridden.
Burgin's opportunity. As chairman of the Mississippi Senate Appropriations Committee, Burgin was the state's chief purchasing agent of sorts. The state neatly divided its finances according to revenue and appropriations. While the Senate Revenue Committee raised money to fund state programs, Burgin's committee was in charge of spending it. Every check the state wrote was within his powerful domain. There were controls, of course--but none the enterprising politician couldn't bypass.
THE "SNIFF TEST"
In theory, any employee authorized to spend an organization's money is a possible candidate for corruption. Those paying the bribes tend to be commissioned salespeople or intermediaries for outside vendors. The following players usually are present in a corruption scheme.
The gift bearer. Illegal inducements often begin when a businessperson routinely offers inappropriate gifts or provides lavish entertainment to an employee with purchasing authority or otherwise tries to ingratiate himself or herself for the purpose of influencing those in charge.
The odd couple. When a purchasing agent becomes the "friend" of an outside vendor, beware. A key technique bribe-givers use is to befriend their targets. They go to lunch together, take trips and engage in other social outings. But often the pair has nothing in common except for an illegal scheme.
The too-successful bidder. A supplier who consistently wins business without any apparent competitive advantage might be providing under-the-table incentives to obtain the work. Be alert to sole-source contracts and to bidders who nearly always win, who win by thin margins and who bid last. These are indicators someone at the company is supplying the winning bidder inside information. …