Glossary

Audit trail

Documents and records that show the history of a company's financial activities, examined by someone who is doing an audit.

Cambridge Dictionary

Beneficial ownership (BO)

A beneficial owner is a person who ultimately has the right to some share of a corporate entity’s income or assets, or the ability to control its activities. If the beneficial owners are hidden, then governments don’t know who is bidding for a contract, companies don’t know who they are doing business with, society doesn’t know who is financing a new political party, and law enforcement can’t fight money laundering and other cross-border financial crimes.

Open Ownership

Bid rigging

Whenever business contracts are awarded by means of soliciting competitive bids, coordination among bidders undermines the bidding process and can be illegal. Bid rigging can take many forms, but one frequent form is when competitors agree in advance which firm will win the bid. For instance, competitors may agree to take turns being the low bidder, or sit out of a bidding round, or provide intentionally high bids to cover up a bid-rigging scheme. Other bid-rigging agreements involve subcontracting part of the main contract to the losing bidders, or forming a joint venture to submit a single bid.

U.S. Federal trade Commission

Bribery

The giving or receiving of a “thing of value” to corruptly influence the actions of another, most commonly to influence a contract award or the execution of a contract.

International Anti-Corruption Resource Center

Collusion

An agreement, usually secretive, between two or more persons or businesses to limit or distort open competition. It can involve an agreement among companies to divide the market, to set prices, to limit production or to share private information. It may also involve bid rigging.

Transparency International – Anti-Bribery Guidance

Conflict-of-interest (CoI)

Situation where an individual or the entity for which they work, whether a government, business, media outlet or civil society organisation, is confronted with choosing between the duties and demands of their position and their own private interests. Companies should establish policies and procedures to identify, monitor and manage conflicts of interest which may give rise to a risk of bribery – actual, potential or perceived.

Transparency International Corruptionary

Contingent liability

Possible obligations whose existence will be confirmed by uncertain future events that are not wholly within the control of the entity.

IFRS Foundation

Corruption

The abuse of entrusted power for private gain, including through bribery, embezzlement, and undue influence.

Transparency International – Glossary

Debarment

Debarment is the term used for an individual or a company being formally excluded from tendering for a project that the government is funding or supporting. A company is debarred when an enquiry or examination finds it has been involved with fraud, mismanagement, or corruption.

U4 Anti-Corruption Resource Centre – Terms

Embezzlement

The misappropriation of property or funds legally entrusted to someone in their formal position as an agent or guardian. Accountants and financial managers typically have access to an agency's funds and so are in a position to embezzle them. Other forms of embezzlement include the taking of supplies and equipment.

U4 Anti-Corruption Resource Centre – Terms

Enhanced due diligence (EDD)

A more thorough and rigorous level of background investigation conducted on higher-risk business relationships or transactions. It goes beyond standard due diligence and involves collecting additional information, verifying sources more extensively, and conducting deeper analysis to better understand and mitigate potential risks.Enhanced due diligence typically involves: more extensive verification of the identity, ownership structure, and business activities of the parties involved; detailed examination of the source and legitimacy of funds; more frequent monitoring of transactions and business relationships; additional checks on politically exposed persons (PEPs) and their associates; investigation of adverse media coverage and reputation; review of regulatory compliance history and legal issues.

Legal Thomson Reuters

Extortion

The practice of obtaining something (money, favours, property) through the use of threats or force. For example, extortion takes place when armed guards exact money for passage through a roadblock. Withholding life-saving medical attention unless a bribe is paid could also be considered an act of extortion. See also sextortion, which involves threats or force to obtain sexual benefits.

U4 Anti-Corruption Resource Centre – Terms

Facilitation payment

Also known as facilitating or grease payments, these are generally small amounts of money paid to public officials or others as a means of ensuring that they perform their duty, whether more promptly or at all.

LexisNexis Legal Glossary

Fraud

Act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation.

World Bank Anti-Corruption Guidelines

Ghost workers

Employees who appear on a payroll but do not actually work for the company or the public institution. Paychecks are created and paid to someone who either does not exist, or exists but does not work for the company or the public institution.

U4 Anti-Corruption Resource Centre – Terms

Grievance mechanism

A process through which grievances concerning business-related human rights abuse can be raised and an effective remedy can be sought. In practice, it is a formalised process through which the institution deals with a grievance or complaint. It includes the procedures and systems for receiving complaints of any sort and facilitating their resolution. Resolution may include steps to enable complainants to seek remedy.

UN Environmental Programe (UNEP)

Illicit financial flows (IFFs)

Illegal movements of money or capital from one country to another, i.e., when funds are illegally earned, transferred, and/or utilized across an international border.

Global Financial Integrity

Integrity due diligence (IDD)

Process to investigating the integrity risk posed by stakeholders in projects, deals and other joint enterprises. Essentially, the goal is to determine the likelihood that an enterprise will suffer fraud or corruption.

World Bank

Kickback

A “kickback” is a bribe paid incrementally by the contractor as it is paid, usually an agreed percentage of the contract.

International Anti-Corruption Resource Center

Lifecycle cost

Cost of an asset or its parts throughout its life cycle, while fulfilling the performance requirements. It takes into account cost or cash flows, i.e. relevant costs (and income and externalities if included in the agreed scope) arising from acquisition through operation to disposal.

ISO 15686-5:2017(en) Buildings and constructed assets — Service life planning — Part 5: Life-cycle costing

Money laundering

The processing of criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardising their source.

United Nations Office on Drugs and Crime (UNODC)

Optimism bias

The demonstrated systematic tendency for practitioners to be over-optimistic about key assumptions in appraisal, such as social costs, social benefits or project duration. Optimism bias means that: the capital costs and operating costs of interventions are typically higher in reality than practitioners originally anticipated; the social benefits of an intervention are typically lower in reality than practitioners originally anticipated; the time taken to deliver an intervention is typically longer in reality than practitioners originally anticipated.

The Green Book – UK Government Guidance on Appraisal

Patronage

Form of favouritism in which a person is selected, regardless of qualifications or entitlement, for a job or government benefit because of affiliations or connections.

Transparency International Corruptionary

Politically exposed person (PEP)

An individual who holds (or has held) a prominent public function and may pose higher corruption risk; often screened in due diligence processes.

U4 Anti-Corruption Resource Centre – Terms

Red flag

Indicators that can help spot potential risks of irregularities, corruption and wrongdoing along the entire chain of a contracting process. While these indicators do not necessarily demonstrate the presence of corruption, they can be considered good measures to signal corruption risks and can be correlated with corrupt practices.

Open Contracting Partnership (OCP)

Rent-seeking

Rent-seeking is to lobby the government for protection, subsidies, and preferential policies for a business. The aim is to avoid competition in the free market and to achieve monopoly-like situations and super-profits (rents).

U4 Anti-Corruption Resource Centre – Terms

Revolving door

Revolving doors refers to individuals' moves from jobs as legislators or regulators into jobs in companies or lobby firms subject to legislation and regulation. It can be abused if not properly regulated.

U4 Anti-Corruption Resource Centre – Terms

Shell company

A shell company is a non-trading company, which is used as a vehicle for various financial manoeuvres, illicit purposes, or which is kept dormant for future use in some other capacity. Shell companies are usually incorporated in a jurisdiction in which it has no physical presence and is unaffiliated with a regulated group.

U4 Anti-Corruption Resource Centre – Terms

State capture

State capture is a type of systematic corruption whereby narrow interest groups take control of the institutions and processes that make public policy, excluding other parts of the public whose interests those institutions are supposed to serve. In so-called “kleptocracies,” public officeholders abuse the power attached to their office to steal money and assets for themselves, but also to change the rules of the game in ways that consolidate and entrench their hold on power.

NYU Center on International Cooperation

Strategic misrepresentation

The tendency to deliberately and systematically distort or misstate information for strategic purposes. This bias is sometimes also called political bias, strategic bias, power bias, or the Machiavelli factor.

Bent Flyvbjerg

Systemic or endemic corruption

A situation when corruption is an integral part of a state's economic, social and political system, and where most people have no alternatives to dealing with corrupt officials. Sporadic corruption, in contrast, occurs irregularly and does not compromise the mechanisms of governance in the same crippling way.

U4 Anti-Corruption Resource Centre – Terms

Undue influence

A more subtle form of corruption as interest groups often make use of legal mechanisms to influence the decision-making process. For instance, they may legally contribute to electoral campaigns; provide research and host receptions but expecting favourable decisions in exchange. Undue influence may also be achieved by promising decision-makers well-paid future jobs in exchange for support.

Transparency International Topic Guides

Value-for-Money (VfM)

The effective, efficient, and economic use of resources, which requires the evaluation of relevant costs and benefits, along with an assessment of risks and of non-price attributes and/or life-cycle costs, as appropriate. Price alone may not necessarily represent VfM.

World Bank – Achieving VfM in Investment Projects Financed by the World Bank

Whistleblower

Whistleblowers are people who inform the public or the authorities about corrupt transactions and/or other unlawful or immoral behaviour they have witnessed or uncovered. These individuals often require protection from those they expose. Whistleblower protection refers to the measures taken to shield the informer from retaliation.

U4 Anti-Corruption Resource Centre – Terms

White elephant

A project with a negative social surplus.

James A. Robinson and Ragnar Torvik

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