How do I deal with the guy who wants a kickback?
February 9, 2006 2:15 PM   Subscribe

I have a potential customer that has made it clear that he wants a kickback. How should i deal with this situation?

This request didn't come to me directly, but through a sales representative that i am working with on what could potentially be a very big project.

I am not even considering giving this guy a kickback, because I believe it would not only be unethical, but could lead to bigger problems down the road if I establish a long term business relationship with this company.

How would ask-mefi diffuse the situation and still get the business? Right now my plan is to play dumb on the surface when the client drops those "take care of me" hints, with the subtext being that I know what he's asking, and I won't be going there, but is there a better way to handle it?
posted by freq to Work & Money (17 answers total)
How clear is clear? Just "make it clear" to him you don't feel comfortable giving him a kickback.

Basicaly he wants his company to give your company money, and your company to give money directly to him, right?

I wouldn't bother with trying to contact his employer or anything like that, and I think it's unlikely that you'll be able to make the sale if you reject the kickback offer, or get this guy busted.

I suppose you could go to the police if you wanted too, because what he's doing is probably illegal.
posted by delmoi at 2:26 PM on February 9, 2006

Where does he sit in his company? Is a complaint to his management likely to get him fired or lose you the contract? Is his company large or medium or small?
posted by jacquilynne at 2:31 PM on February 9, 2006

You don't want this guy's business. You think you do, but you don't. He's trouble, but you already knew that.
posted by bilabial at 2:33 PM on February 9, 2006

This situation is already tainted. If he's made himself clear, and ethics are important to you, then walk away and tell him or his company that you've decided the project is not a good fit for your company. If you take the project, refusing the kickback, he'll only make trouble for you. "Potentially a very big project" will turn into "potentially a very big problem".
posted by ldenneau at 2:34 PM on February 9, 2006

Does the -customer- want a kickback or does a -representative of the customer- want a kickback? Ie. is he the owner of the company or some executive or purchaser within it?

The difference being...if the former, then there's little you can do except drop him like a hot potato. If the latter, then bringing this to the attention of other people in his organization might actually gain you some trust in selling your product after he disappears.
posted by Kickstart70 at 2:34 PM on February 9, 2006

My company gives its advertising clients kickbacks and has even formalized the process. For some it is just an accepted way of doing business.
I think it is a bad idea; the kickback cycle can get quite corrupt. Stay out of it if you can.
posted by zonkout at 2:38 PM on February 9, 2006

Put "Kickback monies for Joe Smith" on the initial, itemized estimate.

If the company signs off on it, give him his money, otherwise, sit back and watch the fun.
posted by Crosius at 3:36 PM on February 9, 2006 [1 favorite]

At a place that I worked we always had a "refer up" practise. Pass the buck to your boss, you are then totally and absolutely in the clear.

Though if you do want your actions to remain ethical, there may be a chance that your boss okays the kick-back which you will have to do. Then you have to make a stand to your boss and that will become complicated.
posted by meech at 4:11 PM on February 9, 2006

Just tell him that you don't do that kind of thing. If you lose his company as a customer, write a letter to his CEO explaining how this guy is defrauding him.
posted by caddis at 5:19 PM on February 9, 2006

I'd ask him straight out..." What do you mean exactly, when you say take care of me?" See what the reaction is, then go to your boss...or his boss, whatever the case may be.
posted by lobstah at 6:41 PM on February 9, 2006

Response by poster: Thank you for the advice. As the company I am representing is my own company, I can easily accommodate a kickback or what-have-you, but I choose not to. This potentially makes things simpler, but I believe he knows that I ultimately have the power to make that decision to "take care of him"

My contact is a mid-level good ol' boy of sorts, not upper management, and this may be standard practice for him. I'm not worried about whether or not I get the business. I believe i have the best solution to his problem, and my offer has the potential to make him a hero to his boss.

So far it looks like the moral high ground is easiest to defend :)
posted by freq at 9:04 PM on February 9, 2006

Hey, if it's your company definitely stick to the high road. What goes around comes around: cultivate higher-quality clients, and you'll have greater success.
posted by five fresh fish at 9:12 PM on February 9, 2006

In many situations, the kickbacks are given other names. Sometimes they take the form of approved whining and dining, or bundled goodies that go to the individual (free palm pilot, etc.), or the individual is hired to do something quasi-useful and overpayed.

I am not an ethicist, but what's the difference between a kickback and a commission? My guess is that there is some mechanism in place to deal with this appropriately. But I like the "pass it upstream" suggestion a lot.

Without any solicitation on my part, I was offered some light $30/hr. work by a large company that wants a contract with us. is that a kickback? Or insurance/customer maintenance?

/I feel so dirty
posted by craniac at 10:15 PM on February 9, 2006

another good point: if you give the kickback, it's an admission that your product sucks, which you imply above.
posted by craniac at 10:16 PM on February 9, 2006

If I was his employer, I'd want to hear about it. When I worked at the phone company the head of security used to love telling me stories about the crooked purchasing personnel they'd thrown in jail.
posted by Opposite George at 1:11 AM on February 10, 2006

If you don't care about getting the contract, definitely go to his manager. Or the CEO. Or whatever. The best possible outcome is that he gets fired, AND you get the contract for being so ethical. The worst case scenario is that the company approves of his tactics, in which case you don't really want to be working with them any way.
posted by antifuse at 2:39 AM on February 10, 2006

Best answer: freq, the legality of kickbacks will depend on the jurisdiction in which they might occur, and the ethicality will depend upon the culture within which they might occur. For U.S. businesses, in dealings with foreign corporations, the 1977 Foreign Corrupt Practices Act is the main governing law, and, in my experience, it's the one most businesses are like to run afoul of, when first opening new markets outside the country. I've actually seen it's threat used effectively by one U.S. corporation to stop another U.S. competitor from getting favorable treatment from foreign officials on clothing export quotas from a small Latin American country, in deals as small as $2 million annual value.

But the FCPA is viewed with disdain, and even amusement in a lot of places and cultures where Americans routinely do business on foreign soil, under different rules. I've stood in trade zone bond warehouses in other countries, with full, accurate sets of export/import documents in hand, knowing my shipment should move unmolested, while counting out Ben Franklins to customs officials of foreign governments, to get what should have happened anyway, to actually happen. In Mexico, this is called "la mordida" which literally means "the bite," but rampant as it is, such corruption is benign compared to what you run into in other areas of the world. Best to get some local advice, from reputable people, if that's what you are up against.

On the other hand, if you are asking about some deal you are doing in the U.S., where some guy is trying to be Tony Soprano, I've got a few other thoughts for you. First is, is the guy credible? Could he actually deliver a deal, if you gave the kickback? Could he squelch it, if you don't? In my experience, a lot of these guys talk a big game, but they're short on the real influence they are trying to sell. Often, in a deal of any size, there are several steps to final contracts, some of which present opportunities for demonstrations of your contact's ability to deliver. If he's unwilling to show you he can actually help in the prelims, before you pass any money, it's because he can't. Playing with the joker early in the dance, to get some real show of what he can or can't do, offers you some benefits, even if you don't go through with the kickback, and some healthy skepticism costs you nothing early on. You may also get handed a "smoking gun" in the form of bid documents from competitors, internal memos, or other hard evidence of corruption you can use as you will, for good or evil.

Second thing is, as the potential payer, you've got a "right" to hear the proposition, plain and simple. If a guy soliciting a kickback is trying to be cute, he's got a reason to be concerned about blowback from you, which means he's not secure in his position, and may flip for a better offer from a competitor of yours, or be flaky in a dozen other ways, etc. The really corrupt will make no bones about their expectations, because you can't hurt them. But once bought, they stay bought, as long as you keep paying, partly because of the curious operation of "honor among thieves" in business deals complicated enough to require contractual process.

You say "I am not even considering giving this guy a kickback" but if you are still talking, you're giving the appearance of considering it, your "play dumb" tactic notwithstanding. You give that appearance very long, and you are considering it. Consider it long enough, and the proposition is either going to be made specific (as I've described), or your bad boy is going to flake, maybe shutting you out for some other competitor, even if he gains nothing for himself in doing so.

You can't "defuse" the situation. You can only take the high road, or not.
posted by paulsc at 5:45 AM on February 10, 2006

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