Banking on a bribe

Image of man handing over cash

An investigation was commenced after law enforcement received information from a major bank relating to the acceptance of bribes by two of its employees. The investigation revealed the employees had accepted bribes totalling approximately USD2.2 million over seven months from an Information Technology (IT) company based in the USA for preferment in relation to a contract between the bank and the company. 

Of the two suspects, one was charged and received a jail sentence of three and a half years and the other suspect's case is currently before the courts after a not guilty plea.

Indicators

The following indicators may be helpful to identify criminal activity:

  • An employee, especially in a role involving contract management or the procurement of high-value assets on behalf of the organisation, receiving international funds transfer instructions (IFTIs) from a business and/or personal account appearing excessive in value, e.g. greater than AUD100.000.
  • The funds received may be from a business account of a company:
    • involved in the same industry as the recipient, e.g. an IT specialist employee receiving funds from an IT company; and/or
    • based domestically or overseas.
  • Following the receipt of funds with the above characteristics, the recipient sends funds to their own or to third party personal accounts.

Investigation outline

The investigation commenced after law enforcement received information from a major Australian bank about two of its employees (suspect A, a US citizen and suspect B, a New Zealand citizen) accepting bribes. As a result of the internal investigation the bank uncovered its employees, both senior IT managers, accepted bribes totalling approximately USD2.2 million in exchange for preferment in relation to a US-based IT company contracted to provide services and products to the bank.

The employees remained in contact with the US based manager of the IT company (person Y) throughout their tenure and in the lead up to receiving bribes. Shortly after the IT company was sold to a publicly listed company in the US the suspects received payments from two US-based accounts. Law enforcement alleged the contract with the bank contributed significantly to the IT company's sale value.

The payments were made from the account of a US-based charitable organisation of which person Y was also a founding donor, and a US-based entity sharing the same address as the charitable organisation (person Z). The charity was created for the purpose of transferring funds to the suspects.

Figure 1: The acceptance of bribes by two bank employees

When questioned by the bank in relation to payments received from the charity, the suspects stated the funds were received for legitimate services provided, with suspect B even producing fake invoices to substantiate the claim. Their employment was terminated after the bank's investigation revealed the suspects' claims were false.

Industry contribution

A suspicious matter report (SMR) submitted by the bank contained details of the internal investigation conducted on two of its employees and revealed:

  • In a seven month period approximately USD2.2 million was received by the suspects from the charity and/or person Z's personal account.
  • Suspect A received a total of approximately USD630,000 from the charity and/or person Z's personal account.    
  • Suspect B received a total of approximately USD1.8 million from the charity and/or person Z's personal account. 
  • Suspect A, assisted by person Z, fabricated invoices to support the false claim that the funds were received for the provision of legitimate services provided by the suspects to the charity.     

AUSTRAC contribution

AUSTRAC submitted a financial analysis report to law enforcement which:

  • Confirmed suspect A received two transfers and suspect B received three transfers, valued at approximately AUD170,000 and AUD642,000 respectively, from the charity and/or person Z's personal account.
  • Revealed suspect A sent approximately AUD122,000 to the US to a personal account, and to accounts appearing to be of family members, after receiving payments from the charity. 
  • Identified further persons of interest to law enforcement including Australia based recipients of funds from the US-based IT company.

Outcome

Both suspects were charged with the offence of Receiving a Corrupt Commission or reward under Section 249B(1)(b) of the NSW Crimes Act 1900/40. Suspect A received a three and a half year sentence and with a non-parole period of two years and three months, and suspect B's case is currently before the courts after a not guilty plea.

Case study summary

Offence

Fraud, Corruption/bribery

Customer

Individual

Industry

Banking

Channel

Electronic

Report type

SMR
IFTI

Jurisdiction

Domestic
United States of America

Designated Service

Account and deposit-taking services

Last modified: 09/03/2017 12:21