Q&A: Corrupt Management

Q We’ve had problems with a corrupt management in the past. I’m suspicious of our current management and several board members receiving  kickbacks from vendors. Are there any steps that I can take to find out if this  is repetition of our previous managing company and possibly board members  participating in kickbacks?  

 —Board Member in Queens

A “Uncovering corruption is never an easy task,” says Stewart E Wurtzel, Esq. of Manhattan-based Deutsch Tane Waterman & Wurtzel, P.C. “Here, the letter writer does not specify the basis of his suspicions or what  behavior he observed that raises concern. It is therefore difficult to specify  what steps can be taken to prevent a particular problem. However, the following  suggestions are a starting point.  

 “The best way to minimize the risk of corruption is to be as active a board  member as possible in the vendor selection process. Being the point person in  the selection process substantially reduces the risk that the vendor will give  a kickback to someone who does not control the selection process. If it is a  non-bid job, ask management for an explanation as to why one vendor was chosen  over another. Find out how often the manager uses the same vendor at his other  buildings. Bear in mind that this can just as likely mean that the contractor  does good work and the manager is happy with their performance.  

 “As a board member you are entitled to complete access to all corporate books and  records. If you are new to the board, review how the contractors were selected  and how they have performed in the past. An accepted bid that is higher than  lower priced comparable ones from other vendors or blind loyalty to a company  that is providing less than stellar goods or services may possibly indicate that the selection or retention process has been compromised  

 “Unfortunately, mere suspicion of illegal activity, without some degree of proof,  will make it difficult to get government agencies involved. While the District  Attorney’s office does investigate and pursue contractors, agents or board members who  are engaged in illegal activity, it will take more than speculation or mere  suspicion to get the district attorney to act.  

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