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10 Steps of Complex Fraud and Corruption Investigation

The steps below apply to internal investigations of suspected corruption or fraud conducted by
international development agencies that lack the ability to compel the production of evidence by
subpoenas or otherwise, and which do not have other law enforcement powers.
Click on each step for more detailed information.
STEP ONE Begin the case (respond to complaint, etc.)
If the case starts with a complaint or report, fully debrief the complainant, getting as much detail as
possible. If the case starts with the discovery of a red flag, match the red flag to the potential
scheme and then look for other red flags of the suspected schemes. An automated, proactive
search for fraud indicators might be effective if the necessary data is available.
STEP TWO Test the allegations
Examine the relevant project files for preliminary confirmation or rebuttal of the suspected scheme.
STEP THREE Conduct due diligence background checks
Check on-line and other records on the suspect firms and individuals to look for other evidence
of fraud or corruption, such as prior debarments by a contractor or evidence that a project official is
living beyond his means.
STEP FOUR Complete the internal investigation
Complete the collection of documents, data and interviews within the investigating organization.
Determine if an early interview of the subject is warranted. Look for evidence of corrupt influence
through the manipulation of the SPQQD factors Selection, Pricing, Quantity, Quality and Delivery;
collect the documents and other evidence of fraudulent representations. Access the relevant e-mail
and computer hard drive information.
STEP FIVE Check for predication and get organized
Review the results of the investigation to date to determine if there is adequate predication a
sufficient factual basis to proceed. Decide or refine the initial case theory, organize the evidence
according to the elements of proof of the potential claims.
Also, if law enforcement assistance is needed (e.g., to subpoena documents, exercise search warrants
or to request international legal assistance) to complete the recommended investigative steps, below,
determine if there is sufficient probable cause (PC) to obtain such cooperation. If not, identify and
pursue the steps needed to obtain the necessary PC.
STEP SIX Begin the external investigation
Conduct interviews of witnesses outside the investigating organization, proceeding from the
disinterested, cooperative witnesses to facilitators to co-conspirators to the subjects. Request or
compel documents from third parties and the suspect contractors through negotiated agreements,
the exercise of audit rights or, if available, subpoenas.
STEP SEVEN Prove Illicit Payments
Determine the best strategy to prove illicit payments: out from the point of payment (by examining
the contractors records), or back from the point of receipt (from the suspect employees records) and
begin the tracing process. If it is not possible to prove the corrupt payments directly, try to prove
them circumstantially by showing the subject displayed unexplained sudden wealth or expenditures.
STEP EIGHT Obtain the cooperation of an inside witness
This could be the middleman or the smaller of several bribe payers. Identify the appropriate insider
and decide the best strategy to obtain his or her cooperation.
STEP NINE Interview the primary subject
Conduct a thorough interview of the subject on financial issues (sources of income and expenditures)
and other issues in the case. Decide if there is sufficient evidence to obtain a confession. If not,
attempt to obtain helpful admissions and identify possible defenses. Request relevant financial and
other records.
STEP TEN Prepare the final report
Decide what action to recommend based on the results of the investigation an administrative
sanction or criminal referral, for example and prepare a concise final report, organized according to
the elements of proof for the relevant offenses.