Kickback

  

It's a dark wharf at midnight. A car with no plates. The nervous guy in the suit...he’s the IT (or information technology) head buyer for the bank Shmoop Nar-go. He’s the decision-maker on buying 3 billion dollars worth of database software. Then there’s another guy...just got out of the car...he’s the head of sales of Delphi Databases R Us.

He’ll make a 3% or 10 million dollar commission on this 10-year contract if it goes through. All it takes is this littteeeelllle bit of grease to make the wheels turn. A briefcase full of 100 grand in unmarked bills.

This dough to the buyer? It’s a kickback. And it’s an obvious one. In real life, kickbacks are...way more insidious.

The head of sales owns a beach house in the Hamptons. Maybe he, um…lets his buyers stay there on weekends. Sound like a Ludlum-y kind of spy novel? Well, it happens all the time. Same as Hewlett Packard and Oracle and others...all have come down with salespeople being nailed, execs being fired, and business, uh…well, continuing to practice, more or less.

The big problem? Foreign markets, where kickbacks are kinda sorta just the way they do business over there. So if we’re trying to play by our rules, and imposing them on some small, struggling nation, where the people are desperate to simply make enough money to feed their children...then how do we think about the morality of kickbacks? Buddha probably knows.

Find other enlightening terms in Shmoop Finance Genius Bar(f)