Corporate Fraud Handbook: Prevention and Detection, 4th Edition

CHAPTER 10

Bribery

Case Study: Why Is This Furniture Falling Apart?

A number of years ago, the Washington Post ran a series of articles detailing charges of waste, fraud, and abuse in the General Services Administration (GSA), the federal government's housekeeping agency. In particular, for more than a decade, a furniture manufacturer in New Jersey had churned out $200 million worth of defective and useless furniture that the GSA purchased.

  Despite years of complaints from the GSA's customers about the shoddiness of the furniture and equipment, the GSA had done little to investigate the contractor, Art Metal U.S.A.1 Government agencies that had been issued the furniture, such as the Internal Revenue Service, the Central Intelligence Agency, and the State Department, told horror stories about furniture that fell apart, desks that collapsed, and chairs with one leg shorter than the others.

  When federal employees complained to the GSA, they were ignored or rebuffed. “You didn't fill out the right form,” the GSA would say, or “You have to pay to ship it back to the contractor and wait two years and you might get a replacement.” After several years, this behavior naturally gave rise to the speculation that bribery and corruption were the cause of the problem.

  A series of newspaper articles led to a congressional investigation. Peter Roman, then chief investigator for a subcommittee ...