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Full Version: What proportion of any 1 billion dollar contract 'evaporates'?
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My guess is that substantially more than $100 million (10%+) turns into second homes, yachts, skiing holidays, private education for children and the like. Any attempt to prevent corruption adds a new (and potentially even more expensive) level of corruption.
What kind of contract are you talking about? Government secured pensions?
(Jul 25, 2018 12:41 AM)confused2 Wrote: [ -> ]My guess is that substantially more than $100 million (10%+) turns into second homes, yachts, skiing holidays, private education for children and the like. Any attempt to prevent corruption adds a new (and potentially even more expensive) level of corruption.


Concern over keeping construction projects and public sector services running smoothly may have led the UK government to keep feeding Carillion such contracts and thereby helping maintain the deceptive appearance of the corporation being healthy (cash flow chugging away), until the point where it became obvious that the business wasn't hunky-dory.

Carillion's waste, mismanagement, and personal-expenses monster was either partly or significantly hidden under its extravagant use of SPEs, whose level of indebtedness didn't appear on its balance sheet. There was also the usual intangible assets -- Carillion's business model revolved around cash flow and the unstable goodwill values assigned to it.

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Usually prior to a contract being tended there is a financial requirement for an instrument to agreed upon. This usually means some investors putting forwards a percentage of an amount and a document being drawn up, with large financial institutions and governments (Sovereign Guarantee) guaranteeing the documents value. This can take time, it has a lot of moving parts so can take many months for the documents to be drawn up an agreed upon. In the meantime there can be legislative changes, world events and other miscellaneous acts that can cause such things to drag on. If such things drag on too long it can cause the initial investors to pull their funding which basically scrubs the document, since it means any work towards an instrument has to be started from scratch with new investors should it still be deemed viable.

If an instrument is scrubbed prior to a projected being fully given the go ahead it can cause unnecessary delays or even shut down those projects. It's just one of the many potential factors of how Carillon was likely effected.
Stryder Wrote:..it has a lot of moving parts..
I think that just about captures my train of thought - many of the moving parts (and associated costs) are an industry in their own right totally unrelated to the intended (stated) goal of any contract. Looking at UK company Carillion ( https://en.wikipedia.org/wiki/Carillion#...ar2018-226 ) some (not me) might describe it as a multi-billion pound fraud run for the benefit of the directors and their friends.
Same link:-
"It later emerged that Carillion paid £6.4m to 12 firms of advisers the day before pleading for an emergency £10m loan from the UK Government; £2.5m was paid to Ernst and Young, with other large payments to Slaughter and May (£1.2m), FTI Consulting (£1m) and Lazard and Co (£0.5m).[197]"
In fairness to the free market economy it may be advantageous to give a relatively small amount of money to a bunch of crooks who then convince subcontractors to build (say) schools and hospitals - knowing that the crooks will be paid and subcontractors will receive little or nothing. Once subcontractors cotton on to the game they may (or may not) become part of the fraud - if it looks like a school (or hospital) then it is a school (or hospital). The guys (or gals) that might say there are serious flaws can earn a lot more (a tiny slice of 7 billion) by saying there aren't serious flaws than by saying there are.
And so it goes on.