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Every time this story comes up, the comments are filled with people proclaiming that kickbacks like this are totally normal and very common. I can't tell how m

Every time this story comes up, the comments are filled with people proclaiming that kickbacks like this are totally normal and very common. I can't tell how much of it is random people projecting their cynicism onto the business world, or if it's people who have been part of bribery/kickback schemes themselves trying to normalize the behavior online. Either way, cases like this should make it clear that the behavior is not a good idea.

Phillip98798 5y ago
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- cgriswald 5y ago
  That kind of comparison is meaningless and useless. The question should not be, "Should we criminalize fraud if people disagree about the results of this one specific unrelated case?" The question should be, "Should we criminalize fraud and if so what are the optimal penalties for disincentivizing new and repeat activity?"
- rpmisms 5y ago
  > Eschew flamebait. Avoid unrelated controversies and generic tangents. > Please don't use Hacker News for political or ideological battle. It tramples curiosity. We could definitely talk about the criminal justice system, but basically saying "the jury was wrong and I'm mad" isn't substantive.
- cowpig 5y ago
  Your point, as I understand it: you disagree with a jury's conclusion in one, high-profile case, therefore the entire justice system isn't necessary or there should be no consequences for white-collar crime. Or perhaps more charitably: you've become disillusioned about the judicial process in general, seeing a lot of results you consider unjust, therefore the entire justice system isn't necessary or there should be no consequences for white-collar crime. Neither is even a bit convincing. If one can significantly increase their personal wealth at mere risk of being fired, then the least honest people will accumulate all the wealth and power.
  - deleted 5y ago
    [deleted]
ksec 5y ago
>I can't tell how much of it is random people projecting their cynicism onto the business world Is this on HN? Because I rarely sees it. Most people working in Tech and specifically software development are so abstracted from these type of things they think they are extremely rare. It is still a common thing though. At least it happens much more often than most people thought. And it is not cynicism but personal experience.
- 3maj 5y ago
  Happens in manufacturing allll the time, especially if you're contracting our work to companies in India/China/Vietnam/etc.
- jdavis703 5y ago
  If you’re on a government contract, it’s quite likely you’re exposed to all sorts of opportunities for wrong doing, even as a technical worker. Try talking to a retired government worker for juicy stories some time (there are three generations of tech workers in my family, and all of us have done government work or contracting since the 1960s). This is why government workers and contractors have to take so much anti-corruption training (I’ve never been subject to this in any purely private sector jobs).
vmception 5y ago
or not trying to normalize but pointing out that its already normalized to the point that you can’t be an effective employee due to competition with people winning deal flow via kickbacks The actions in question occurred almost 10 years ago, how many people lost commissions and bonuses and promotions and jobs and relationships by trying to play fair? acknowledging this isn’t being an apologist for it or condoning it even the DOJ indictment only acknowledges Netflix shareholders being deprived of tiny tiny amounts of profits, not everyone at all the other companies in the wake over the last decade, which is kind of a slap in the face and like a joke that public servants actually bothered, using that rationale. so with that reality the incentive is still there to kickback and relax
- president 5y ago
  Yes, this is effectively a race to the bottom situation and is a form of corruption of the rule of law. In today's world, we tend to have a culture of "letting things slide" and all this does is gradually normalize and escalate breaking the law over a long period of time.
  - zapataband1 5y ago
    Cost of wage theft by employers is 3 times the total cost of burglaries. There's a few articles about wage theft over the year and probably 100 a day about burglaries. White collar crime does not pay.
    - savingsPossible 5y ago
      That is the most amazing statistic! What exactly is the definition of wage theft? Do you have a source? I would love to have it
      - ceh123 5y ago
        Not sure about this source, but [0] gives some insight into this. Wage theft is typically defined as legally earned wages than an employer refuses to give to the employee (think tips not being given appropriately, overtime hours not compensated for as an hourly employee, etc.) [0] https://www.epi.org/publication/wage-theft-bigger-problem-forms-theft-workers/ https://www.epi.org/publication/wage-theft-bigger-problem-fo...
mc32 5y ago
I’m sure every employee has to read their company’s code of conduct and those are quite unambiguous about what’s allowed and what isn’t and that which isn’t is serious and will get you fired --no company wants to have to mobilize lawyers and waste hundreds of professionally billed hours for an employee violating regulations.
- d0mine 5y ago
  Usually such things as CoC are worded in such a way that everyone is guilty. It is a tool by those in power to dismiss anyone they like.
  - humanistbot 5y ago
    "You must report all gifts from entities seeking to sell products or services to the company" seems pretty unambiguous.
    - d0mine 5y ago
      Obviously, some rules are less ambiguous than others. For me, it is hard to understand why lobbying is legal at all.
notch656a 5y ago
The average American may earn something like 125k in 30 months. 700k in exchange for a small chance of 30 months in jail probably sounds like a good deal to a purely rational and amoral person.
- dkyc 5y ago
  The average American likely isn't in a position to make business spending decisions that would warrant a 700k bribe, though.
- bgirard 5y ago
  But it's not usually the average American in a position to receive bribes like that. 700K for an executive might not be a good deal for most.
  - notch656a 5y ago
    Depends on the probability of being caught, which is usually extremely low.
    - bgirard 5y ago
      True, but at those levels the marginal utility of money is much lower than 30 months of your life. Clearly some people take the chance, I wouldn't.
- jjulius 5y ago
  Edit: Half-awake, math wrong, ignore me.
  - notch656a 5y ago
    If 700k - p_caught * (value of 30 months of your life + 700k + reputation + fines) is greater than 0, a rational and amoral person should execute the trade.
  - colejohnson66 5y ago
citizenpaul 5y ago
This was pay to play and the play was not delivered. Hence the blowback from upset "victims" coming after their money. Kickbacks are common sorry man. Its harder in public sector because of the eyeson you but there are ways around it. You just have to be in the right position. Kickbacks are almost never posecuted because both sidea get what they want.
- DFHippie 5y ago
  There are more than two sides.
  - citizenpaul 5y ago
    Yes and no. As a thought exercise it can be thought of as two parties even if you have to pay off more than one entity in the real world. Its part of the reason gov projects are almost always over budget and behind schedule. The only way to prevent corruption is to make the corruption more expensive than just paying upfront. However by putting these endless bureaucracies in place it also raises the total cost of the project.
coldtea 5y ago
>I can't tell how much of it is random people projecting their cynicism onto the business world, or if it's people who have been part of bribery/kickback schemes themselves trying to normalize the behavior online. Or people who actually know about those things, having worked in/with/studied the various industries, without having "been part of bribery/kickback schemes themselves", and have seen them to be fairly widespread - that's a missing third option. I added this, because the above comment is still that of the proverbial starry-eyed kid arriving with the bus to L.A. from Nebraska, and paints a false dichotomy that ends up with the same conclusion ("this can't possibly be widespread"): (a) it's either cynical people (so this isn't widespread, it's just their cynicism that thinks so) (b) or it's crooks looking to normalize their behavior (so this isn't widespread, it's just isolated "bad-apple" cases justyfing themselves) Even merely studying different industries, you'll find such scandals (and worse) in some of the biggest companies on Earth, with upper management knowledge and encourangement, collaboration with local governments, cover-up and diplomatic protection from the company's own government, and so on. Just an example, from one of the biggest companies in the world, with tons of different executives and branches involved, and with different corruption cases all around the world: https://www.sec.gov/news/press/2011/2011-263.htm https://www.sec.gov/news/press/2011/2011-263.htm https://www.sandiegouniontribune.com/sdut-lt-latam-siemens-bribes-121608-2008dec16-story.html https://www.sandiegouniontribune.com/sdut-lt-latam-siemens-b... https://www.reuters.com/article/norway-siemens-idUSL1341832220071213 https://www.reuters.com/article/norway-siemens-idUSL13418322... https://www.nytimes.com/2008/12/21/business/worldbusiness/21siemens.html https://www.nytimes.com/2008/12/21/business/worldbusiness/21... https://en.wikipedia.org/wiki/Siemens_Greek_bribery_scandal https://en.wikipedia.org/wiki/Siemens_Greek_bribery_scandal How about IBM: https://medium.com/worm-capital/the-ibm-hall-of-shame-a-semi-complete-list-of-bribes-blunders-and-fraud-19e674a5b986 https://medium.com/worm-capital/the-ibm-hall-of-shame-a-semi... https://www.wsj.com/articles/u-s-drops-multi-country-bribery-probe-of-ibm-1501168568 https://www.wsj.com/articles/u-s-drops-multi-country-bribery... https://fortune.com/2017/07/27/ibm-poland-investigation/ https://fortune.com/2017/07/27/ibm-poland-investigation/ https://www.bbc.com/news/business-12793255 https://www.bbc.com/news/business-12793255 Microsoft? https://www.zdnet.com/article/microsoft-to-pay-25m-to-doj-and-sec-in-hungary-bribery-case/ https://www.zdnet.com/article/microsoft-to-pay-25m-to-doj-an... https://www.reuters.com/article/us-microsoft-settlement-idUSKCN1UH1P3 https://www.reuters.com/article/us-microsoft-settlement-idUS... GE and more: https://www.cnbc.com/2019/05/17/fbi-targets-johnson-johnson-siemens-ge-philips-in-brazil-graft-case-sources.html https://www.cnbc.com/2019/05/17/fbi-targets-johnson-johnson-... https://www.ojp.gov/ncjrs/virtual-library/abstracts/whistleblowing-and-corruption-control-ge-general-electric-case https://www.ojp.gov/ncjrs/virtual-library/abstracts/whistleb... https://www.industryweek.com/the-economy/regulations/article/21942019/ge-pays-23-million-over-iraq-bribery-charges https://www.industryweek.com/the-economy/regulations/article... A general study focusing on past: "As the 2000s decade progressed, a different breed of corporate scandals began to surface. For example, companies such as ABB Limited, Daimler Chrysler, El Paso Corporation, General Electric, Halliburton, Lee Dynamics, Lucent Technologies, and Siemens AG were found guilty of violating U.S. law and consequently, also rattled shareholders’ trust (Cascini & DelFavero, 2008, p.27). The named businesses were found guilty of committing bribery (...)" https://digitalcommons.sacredheart.edu/cgi/viewcontent.cgi?article=1044&context=wcob_fac https://digitalcommons.sacredheart.edu/cgi/viewcontent.cgi?a... And we haven't even got into weapons, aviation, construction, and medicine industry bribes (industries which are to bribes what Xerox PARC was for UI innovations!)
pyb 5y ago
This guy was able to extract kickbacks from nine different vendors. So in fact, it looks quite a few companies have systems in place to "facilitate" deals if needed.
- lern_too_spel 5y ago
  And none of these nine vendors (or any of their competitors that Kail might have approached) reported the crime to the authorities.
dkdk8283 5y ago
It’s human nature to scratch each other’s backs. It’s happening, will continue to happen, and there’s little which can be done. It’s always a game of cat and mouse. Legalizing small time bribery where it can be done out in the open would probably be far more effective then advocating for things like increased workplace surveillance. Thinking commerce can happen without corruption or kickbacks is just naive.
- acover 5y ago
  It's also human nature to murder each other. Natural doesn't mean good. https://ourworldindata.org/ethnographic-and-archaeological-evidence-on-violent-deaths https://ourworldindata.org/ethnographic-and-archaeological-e...
  - autokad 5y ago
    its nature to murder. humans murder each other far less than other primates.
coffeefirst 5y ago
I'm always reminded that HN is global, and sometimes people are representing what's normal or common where they're sitting, not necessarily everywhere.
- jimkleiber 5y ago
  I appreciate you pointing this out, I easily forget this. I think the extreme version of this is me taking something that is routine or normal for me individually and assuming all other humans must do it. Or taking something that my spouse, boss, or parent did and assume all spouses, bosses, or parents must do it. Not necessarily.
bko 5y ago
My question is how this could lead to jail time? I mean, its against policy, the employer can sue for damages, fire the person, etc. But to throw someone in jail for breaking essentially a corporate policy seems really off.
- fecak 5y ago
  It's corporate corruption and this type of behavior prevents companies from competing fairly. It's bigger than "corporate policy". That's like saying "theft" is against corporate policy, so when I embezzled $10K I should just get fired instead of jailed.
- BrazzVuvuzela 5y ago
  > But to throw someone in jail for breaking essentially a corporate policy seems really off. It "seems off" because that obviously isn't what happened. > Jury Earlier Returned 28 Guilty Verdicts Convicting Michael Kail of Fraud and Money Laundering for Pay-To-Play Payments from Tech Startups Seeking Netflix Contracts These are crimes, not mere violations of corporate policy.
  - bko 5y ago
    > “Bribery and kickbacks are pernicious crimes that stifle Silicon Valley’s culture of competitive innovation,” said Acting United States Attorney Stephanie M. Hinds. “Michael Kail used his highly compensated Netflix position to siphon cash and valuable stock options from his tech vendors, the same vendors whose Netflix contracts he signed and whose technologies he pushed his teams to use. Such crimes come with a cost, as reflected by the prison sentence that Kail will now serve.” So the person took bribes and hurt other tech vendors and the corporation. Sure. But suppose you hurt the organization and partners by being incompetent at your work. Or having bad judgement, or being lazy, or a million other things. Would it be okay to send those people to prison? "Pay-to-Play" isn't illegal. I don't even know what it is. Coke pays to have their beverage in AMC theaters. Is that pay to play? Is Pepsi more worthy of that slot? "Money Laundering" is incredibly broad and can be applied to a lot of things.
    - 5y ago
autokad 5y ago
what I don't understand is none of the companies that bribed him had criminal charges levied against them. doesn't this reek of companies doing bad ok, smash the ants?
vishnugupta 5y ago
I know of people who AWS fully sponsored, including business class intercontinental travel, to attend re:Invent which is essentially a week long holiday party, by virtue of AWS bill. Every vendor has marketing budget and a decent portion of it goes to keeping their point people at clients happy. You can call it kick back or whatever, it’s a matter of semantics. So yes it is normal. And no it’s neither cynical and nor have I been involved in. But I’ve seen it happen around me. So I know it’s a routine thing.
- PragmaticPulp 5y ago
  > I know of people who AWS fully sponsored, including business class intercontinental travel, to attend re:Invent which is essentially a week long holiday party, by virtue of AWS bill. Flying people to an AWS conference seems entirely different than funneling money into a single person's bank account. Yes, I know these conferences have a party-like atmosphere, but it's not done surreptitiously and it's not siphoning money out of the deal into someone's pockets.
  - DangitBobby 5y ago
    It doesn't really seem that different.
    - shakezula 5y ago
      This situation is like lobbying: is it the people's voice in fungible action or is it mega-corporations funneling money directly into politicians pockets? The answer is probably both, and any attempt to litigate it will probably be abused and lead to even more issues.
    - ludocode 5y ago
      You think inviting someone to conferences is the same thing as putting $700k in their personal bank account? Is this satire? What is going on in this thread?
      - 5y ago
StreamBright 5y ago
Heh, I have been working for a some corporations in the last 10 years where there was a sort of kickback scheme in place. Some times (very rarely a person got caught, no criminal charges) some timed it was known and nobody cared. Some of my friend chose not to become managers because they did not want to get involved in the scheme.
AtlasBarfed 5y ago
More to the point, virtually every senior member of Presidential administrations do this almost blatantly, big-D or big-R, doesn't matter. This was hundreds of thousands. Those are billions. What's the difference? The person who got caught was a small fry and couldn't pull the strings.
- DFHippie 5y ago
  > More to the point, virtually every senior member of Presidential administrations do this almost blatantly, big-D or big-R, doesn't matter. This is the sort of cynical thing people say because other people say it. Spiro Agnew did it, sure. That was a while ago. What are your other examples? Since virtually every member does this, you should have hundreds. And remember you need a roughly balanced count of Republicans and Democrats. Obama was in office for 8 years. That should be quite a pile. Pure cynicism is an argument against rules and accountability generally.
  - AtlasBarfed 5y ago
    It used to simply be the revolving door back to executive industry positions, which is what ALL the FCC and their ilk are headed by. Those exec positions used to function as the main "deferred bribery" mechanism, because who can question someone getting another job once the administration job ended? You mentioned the Obama administration, I remember the massive criticism early in his admin with the number of revolving door appointees to the various industry-focuses administration positions. The pay cuts they had to take for "public service", and the "oh look at their sacrifice to their country". OH PLEASE. PLEASE. Now since citizens united, it's my impression that the lobbying industry / K street is now completely awash in money even moreso and that is the main source of "deferred bribery". I think near the end of the Obama admin there was going to be a rule change about joining a lobbying firm when you were done with congress. Holy crap did a lot of congress quit all of a sudden. They were cashing in. Rudy Giuliani made a million bucks a year from his law firm. Why? He's not a good lawyer. There is also cush jobs for family members and numerous other ways to do such things. Biden's son is an example, I've seen really crummy stories around Clarence Thomas's family a decade ago that made me realize the Supreme Court was far from an ivory tower immune to corporate influence. Let me ask you a question: why does EVERY SINGLE, D or R, president take a trip to Saudi Arabia near the end of their presidencies? They are the effing president of the USA and they travel TO Saudi Arabia to basically kiss the royal family's butt? Washington is AWASH in money. Yet nobody significant, the central focus of the all that lobbying money, goes to jail. This is hilariously like NCAA football, but with less scrutiny, far more money. Everyone knows its going on, nobody talks about it, sometimes someone gets busted for going "too far".
dylan604 5y ago
Oh please. Ever watched Mad Men, or any other tv/film that shows the wining and dining of prospective clients by a sales person/team? Every time a sales person spends money on a prospective client is written off as an expense, so the gov't is pretty much condoning it. There are tons of stories of big pharma sending doctors to lavish resorts in the guise of a "conference". Ever heard of payola? The music business has been based on bribes. Why would you think of the film business being different? Hell, the states are involved just as much with tax incentives to entice productions to use their state/cities as location for that production. You're being quite cynical trying to wrap any person with knowledge of these payout schemes as being involved/complicit.
- gnatman 5y ago
  Mad Men is a fictional TV show set in the 1950s. "Big Pharma" sending doctors to resorts is now illegal in the US under the Sunshine Act.
  - twelve40 5y ago
    I'm always amazed at how people around me really think this way. Yes, every high school chemistry teacher is a meth overlord, and you can just walk into Bank of Spain and rob it, haven't you seen it? facepalm
    - dylan604 5y ago
      You're sarcasm is so good, I can't tell which direction it is aimed. That's pretty impressive. Yes, I know my chem101 teacher wasn't Heisenberg. Yes, I understand how TV is fiction. However, are you really so thick to not realize that fiction is based on reality. Fiction isn't written in a vaccum, and the most interesting plots are typically based on some real situation the author has experienced, seen/heard, etc. Yes, it is dramatized to make the really boring parts interesting so people tune in, but come on. If you don't think a Don Draper/Walter White type existed as a single person or an amalgamation of multiple people then you just have your head in the sand. Using modern TV/Film/media in examples isn't a cluelessness on the speaker's part. It's used as something much more relatable than an esoteric story that you might or might not be able to provide a link to.
__alexs 5y ago
The behaviour of many execs I have worked with would be explained well by this sort of arrangement, but it could equally have been a mix of stubbornness and having no clue. It's politer to assume it was corruption.
deleted 5y ago
[deleted]
handrous 5y ago
Those of us not in elite circles have a little trouble getting worked up over the difference between something that looks like it's scummy, immoral cheating, but is legal, or the same, but illegal. Same played out with the college entrance scandal. "Bribery is great and we love it a bunch—unless you do it wrong because you're not rich enough to do it right, then it's a big ol' no-no" is the message a great many received from that one.
FooBarBizBazz 5y ago
The first time I heard someone talk about a "commission" in this context, I was totally confused -- "I thought salespeople got commissions, not customers?" -- until it all snapped into focus and I was like: "Oh." And from the way they talked, this was normal for B2B sales? So then I look at some decisions that have been made in companies where I've worked, and I wonder...
indymike 5y ago
> I can't tell how much of it is random people projecting their cynicism onto the business world, or if it's people who have been part of bribery/kickback schemes themselves trying to normalize the behavior online. I think most people don't understand the difference between an agreed to agency fee/reseller margin deal, a direct incentive program, and someone just taking money, on the side. Direct Incentives (also call spiffs) are where a supplier pays a bonus directly to the person who sold the deal. These are always agreed to between the companies and reported. Without permission of the employer, they could be very illegal or a major violation of your employment contract.
hintymad 5y ago
A rumor is that Reed Hastings made it his personal mission to ensure that Kail gets the right punishment for he breach the trust of freedom-and-responsibility that Netflix gave to its employees.
throw7 5y ago
Well, do you think our politicians aren't in the same position of the esteemed Michael Kail, VP of Netflix IT Operations? People in power are going to be hit with sex, money, or power. Money, it seems, is just the easiest attack vector.

Phillip98798 5y ago

cgriswald 5y ago
That kind of comparison is meaningless and useless. The question should not be, "Should we criminalize fraud if people disagree about the results of this one specific unrelated case?" The question should be, "Should we criminalize fraud and if so what are the optimal penalties for disincentivizing new and repeat activity?"
rpmisms 5y ago
> Eschew flamebait. Avoid unrelated controversies and generic tangents. > Please don't use Hacker News for political or ideological battle. It tramples curiosity. We could definitely talk about the criminal justice system, but basically saying "the jury was wrong and I'm mad" isn't substantive.
cowpig 5y ago
Your point, as I understand it: you disagree with a jury's conclusion in one, high-profile case, therefore the entire justice system isn't necessary or there should be no consequences for white-collar crime. Or perhaps more charitably: you've become disillusioned about the judicial process in general, seeing a lot of results you consider unjust, therefore the entire justice system isn't necessary or there should be no consequences for white-collar crime. Neither is even a bit convincing. If one can significantly increase their personal wealth at mere risk of being fired, then the least honest people will accumulate all the wealth and power.
- deleted 5y ago
  [deleted]

ksec 5y ago

>I can't tell how much of it is random people projecting their cynicism onto the business world Is this on HN? Because I rarely sees it. Most people working in Tech and specifically software development are so abstracted from these type of things they think they are extremely rare. It is still a common thing though. At least it happens much more often than most people thought. And it is not cynicism but personal experience.

3maj 5y ago
Happens in manufacturing allll the time, especially if you're contracting our work to companies in India/China/Vietnam/etc.
jdavis703 5y ago
If you’re on a government contract, it’s quite likely you’re exposed to all sorts of opportunities for wrong doing, even as a technical worker. Try talking to a retired government worker for juicy stories some time (there are three generations of tech workers in my family, and all of us have done government work or contracting since the 1960s). This is why government workers and contractors have to take so much anti-corruption training (I’ve never been subject to this in any purely private sector jobs).

vmception 5y ago

or not trying to normalize but pointing out that its already normalized to the point that you can’t be an effective employee due to competition with people winning deal flow via kickbacks The actions in question occurred almost 10 years ago, how many people lost commissions and bonuses and promotions and jobs and relationships by trying to play fair? acknowledging this isn’t being an apologist for it or condoning it even the DOJ indictment only acknowledges Netflix shareholders being deprived of tiny tiny amounts of profits, not everyone at all the other companies in the wake over the last decade, which is kind of a slap in the face and like a joke that public servants actually bothered, using that rationale. so with that reality the incentive is still there to kickback and relax

president 5y ago
Yes, this is effectively a race to the bottom situation and is a form of corruption of the rule of law. In today's world, we tend to have a culture of "letting things slide" and all this does is gradually normalize and escalate breaking the law over a long period of time.
- zapataband1 5y ago
  Cost of wage theft by employers is 3 times the total cost of burglaries. There's a few articles about wage theft over the year and probably 100 a day about burglaries. White collar crime does not pay.
  - savingsPossible 5y ago
    That is the most amazing statistic! What exactly is the definition of wage theft? Do you have a source? I would love to have it
    - ceh123 5y ago
      Not sure about this source, but [0] gives some insight into this. Wage theft is typically defined as legally earned wages than an employer refuses to give to the employee (think tips not being given appropriately, overtime hours not compensated for as an hourly employee, etc.) [0] https://www.epi.org/publication/wage-theft-bigger-problem-forms-theft-workers/ https://www.epi.org/publication/wage-theft-bigger-problem-fo...

mc32 5y ago

I’m sure every employee has to read their company’s code of conduct and those are quite unambiguous about what’s allowed and what isn’t and that which isn’t is serious and will get you fired --no company wants to have to mobilize lawyers and waste hundreds of professionally billed hours for an employee violating regulations.

d0mine 5y ago
Usually such things as CoC are worded in such a way that everyone is guilty. It is a tool by those in power to dismiss anyone they like.
- humanistbot 5y ago
  "You must report all gifts from entities seeking to sell products or services to the company" seems pretty unambiguous.
  - d0mine 5y ago
    Obviously, some rules are less ambiguous than others. For me, it is hard to understand why lobbying is legal at all.

notch656a 5y ago

The average American may earn something like 125k in 30 months. 700k in exchange for a small chance of 30 months in jail probably sounds like a good deal to a purely rational and amoral person.

dkyc 5y ago
The average American likely isn't in a position to make business spending decisions that would warrant a 700k bribe, though.
bgirard 5y ago
But it's not usually the average American in a position to receive bribes like that. 700K for an executive might not be a good deal for most.
- notch656a 5y ago
  Depends on the probability of being caught, which is usually extremely low.
  - bgirard 5y ago
    True, but at those levels the marginal utility of money is much lower than 30 months of your life. Clearly some people take the chance, I wouldn't.
jjulius 5y ago
Edit: Half-awake, math wrong, ignore me.
- notch656a 5y ago
  If 700k - p_caught * (value of 30 months of your life + 700k + reputation + fines) is greater than 0, a rational and amoral person should execute the trade.
- colejohnson66 5y ago

citizenpaul 5y ago

This was pay to play and the play was not delivered. Hence the blowback from upset "victims" coming after their money. Kickbacks are common sorry man. Its harder in public sector because of the eyeson you but there are ways around it. You just have to be in the right position. Kickbacks are almost never posecuted because both sidea get what they want.

DFHippie 5y ago
There are more than two sides.
- citizenpaul 5y ago
  Yes and no. As a thought exercise it can be thought of as two parties even if you have to pay off more than one entity in the real world. Its part of the reason gov projects are almost always over budget and behind schedule. The only way to prevent corruption is to make the corruption more expensive than just paying upfront. However by putting these endless bureaucracies in place it also raises the total cost of the project.

coldtea 5y ago

>I can't tell how much of it is random people projecting their cynicism onto the business world, or if it's people who have been part of bribery/kickback schemes themselves trying to normalize the behavior online. Or people who actually know about those things, having worked in/with/studied the various industries, without having "been part of bribery/kickback schemes themselves", and have seen them to be fairly widespread - that's a missing third option. I added this, because the above comment is still that of the proverbial starry-eyed kid arriving with the bus to L.A. from Nebraska, and paints a false dichotomy that ends up with the same conclusion ("this can't possibly be widespread"): (a) it's either cynical people (so this isn't widespread, it's just their cynicism that thinks so) (b) or it's crooks looking to normalize their behavior (so this isn't widespread, it's just isolated "bad-apple" cases justyfing themselves) Even merely studying different industries, you'll find such scandals (and worse) in some of the biggest companies on Earth, with upper management knowledge and encourangement, collaboration with local governments, cover-up and diplomatic protection from the company's own government, and so on. Just an example, from one of the biggest companies in the world, with tons of different executives and branches involved, and with different corruption cases all around the world: https://www.sec.gov/news/press/2011/2011-263.htm https://www.sec.gov/news/press/2011/2011-263.htm https://www.sandiegouniontribune.com/sdut-lt-latam-siemens-bribes-121608-2008dec16-story.html https://www.sandiegouniontribune.com/sdut-lt-latam-siemens-b... https://www.reuters.com/article/norway-siemens-idUSL1341832220071213 https://www.reuters.com/article/norway-siemens-idUSL13418322... https://www.nytimes.com/2008/12/21/business/worldbusiness/21siemens.html https://www.nytimes.com/2008/12/21/business/worldbusiness/21... https://en.wikipedia.org/wiki/Siemens_Greek_bribery_scandal https://en.wikipedia.org/wiki/Siemens_Greek_bribery_scandal How about IBM: https://medium.com/worm-capital/the-ibm-hall-of-shame-a-semi-complete-list-of-bribes-blunders-and-fraud-19e674a5b986 https://medium.com/worm-capital/the-ibm-hall-of-shame-a-semi... https://www.wsj.com/articles/u-s-drops-multi-country-bribery-probe-of-ibm-1501168568 https://www.wsj.com/articles/u-s-drops-multi-country-bribery... https://fortune.com/2017/07/27/ibm-poland-investigation/ https://fortune.com/2017/07/27/ibm-poland-investigation/ https://www.bbc.com/news/business-12793255 https://www.bbc.com/news/business-12793255 Microsoft? https://www.zdnet.com/article/microsoft-to-pay-25m-to-doj-and-sec-in-hungary-bribery-case/ https://www.zdnet.com/article/microsoft-to-pay-25m-to-doj-an... https://www.reuters.com/article/us-microsoft-settlement-idUSKCN1UH1P3 https://www.reuters.com/article/us-microsoft-settlement-idUS... GE and more: https://www.cnbc.com/2019/05/17/fbi-targets-johnson-johnson-siemens-ge-philips-in-brazil-graft-case-sources.html https://www.cnbc.com/2019/05/17/fbi-targets-johnson-johnson-... https://www.ojp.gov/ncjrs/virtual-library/abstracts/whistleblowing-and-corruption-control-ge-general-electric-case https://www.ojp.gov/ncjrs/virtual-library/abstracts/whistleb... https://www.industryweek.com/the-economy/regulations/article/21942019/ge-pays-23-million-over-iraq-bribery-charges https://www.industryweek.com/the-economy/regulations/article... A general study focusing on past: "As the 2000s decade progressed, a different breed of corporate scandals began to surface. For example, companies such as ABB Limited, Daimler Chrysler, El Paso Corporation, General Electric, Halliburton, Lee Dynamics, Lucent Technologies, and Siemens AG were found guilty of violating U.S. law and consequently, also rattled shareholders’ trust (Cascini & DelFavero, 2008, p.27). The named businesses were found guilty of committing bribery (...)" https://digitalcommons.sacredheart.edu/cgi/viewcontent.cgi?article=1044&context=wcob_fac https://digitalcommons.sacredheart.edu/cgi/viewcontent.cgi?a... And we haven't even got into weapons, aviation, construction, and medicine industry bribes (industries which are to bribes what Xerox PARC was for UI innovations!)

pyb 5y ago

This guy was able to extract kickbacks from nine different vendors. So in fact, it looks quite a few companies have systems in place to "facilitate" deals if needed.

lern_too_spel 5y ago
And none of these nine vendors (or any of their competitors that Kail might have approached) reported the crime to the authorities.

dkdk8283 5y ago

It’s human nature to scratch each other’s backs. It’s happening, will continue to happen, and there’s little which can be done. It’s always a game of cat and mouse. Legalizing small time bribery where it can be done out in the open would probably be far more effective then advocating for things like increased workplace surveillance. Thinking commerce can happen without corruption or kickbacks is just naive.

acover 5y ago
It's also human nature to murder each other. Natural doesn't mean good. https://ourworldindata.org/ethnographic-and-archaeological-evidence-on-violent-deaths https://ourworldindata.org/ethnographic-and-archaeological-e...
- autokad 5y ago
  its nature to murder. humans murder each other far less than other primates.

coffeefirst 5y ago

I'm always reminded that HN is global, and sometimes people are representing what's normal or common where they're sitting, not necessarily everywhere.

jimkleiber 5y ago
I appreciate you pointing this out, I easily forget this. I think the extreme version of this is me taking something that is routine or normal for me individually and assuming all other humans must do it. Or taking something that my spouse, boss, or parent did and assume all spouses, bosses, or parents must do it. Not necessarily.

bko 5y ago

My question is how this could lead to jail time? I mean, its against policy, the employer can sue for damages, fire the person, etc. But to throw someone in jail for breaking essentially a corporate policy seems really off.

fecak 5y ago
It's corporate corruption and this type of behavior prevents companies from competing fairly. It's bigger than "corporate policy". That's like saying "theft" is against corporate policy, so when I embezzled $10K I should just get fired instead of jailed.
BrazzVuvuzela 5y ago
> But to throw someone in jail for breaking essentially a corporate policy seems really off. It "seems off" because that obviously isn't what happened. > Jury Earlier Returned 28 Guilty Verdicts Convicting Michael Kail of Fraud and Money Laundering for Pay-To-Play Payments from Tech Startups Seeking Netflix Contracts These are crimes, not mere violations of corporate policy.
- bko 5y ago
  > “Bribery and kickbacks are pernicious crimes that stifle Silicon Valley’s culture of competitive innovation,” said Acting United States Attorney Stephanie M. Hinds. “Michael Kail used his highly compensated Netflix position to siphon cash and valuable stock options from his tech vendors, the same vendors whose Netflix contracts he signed and whose technologies he pushed his teams to use. Such crimes come with a cost, as reflected by the prison sentence that Kail will now serve.” So the person took bribes and hurt other tech vendors and the corporation. Sure. But suppose you hurt the organization and partners by being incompetent at your work. Or having bad judgement, or being lazy, or a million other things. Would it be okay to send those people to prison? "Pay-to-Play" isn't illegal. I don't even know what it is. Coke pays to have their beverage in AMC theaters. Is that pay to play? Is Pepsi more worthy of that slot? "Money Laundering" is incredibly broad and can be applied to a lot of things.
  - 5y ago

autokad 5y ago

what I don't understand is none of the companies that bribed him had criminal charges levied against them. doesn't this reek of companies doing bad ok, smash the ants?

vishnugupta 5y ago

I know of people who AWS fully sponsored, including business class intercontinental travel, to attend re:Invent which is essentially a week long holiday party, by virtue of AWS bill. Every vendor has marketing budget and a decent portion of it goes to keeping their point people at clients happy. You can call it kick back or whatever, it’s a matter of semantics. So yes it is normal. And no it’s neither cynical and nor have I been involved in. But I’ve seen it happen around me. So I know it’s a routine thing.

PragmaticPulp 5y ago
> I know of people who AWS fully sponsored, including business class intercontinental travel, to attend re:Invent which is essentially a week long holiday party, by virtue of AWS bill. Flying people to an AWS conference seems entirely different than funneling money into a single person's bank account. Yes, I know these conferences have a party-like atmosphere, but it's not done surreptitiously and it's not siphoning money out of the deal into someone's pockets.
- DangitBobby 5y ago
  It doesn't really seem that different.
  - shakezula 5y ago
    This situation is like lobbying: is it the people's voice in fungible action or is it mega-corporations funneling money directly into politicians pockets? The answer is probably both, and any attempt to litigate it will probably be abused and lead to even more issues.
  - ludocode 5y ago
    You think inviting someone to conferences is the same thing as putting $700k in their personal bank account? Is this satire? What is going on in this thread?
    - 5y ago

StreamBright 5y ago

Heh, I have been working for a some corporations in the last 10 years where there was a sort of kickback scheme in place. Some times (very rarely a person got caught, no criminal charges) some timed it was known and nobody cared. Some of my friend chose not to become managers because they did not want to get involved in the scheme.

AtlasBarfed 5y ago

More to the point, virtually every senior member of Presidential administrations do this almost blatantly, big-D or big-R, doesn't matter. This was hundreds of thousands. Those are billions. What's the difference? The person who got caught was a small fry and couldn't pull the strings.

DFHippie 5y ago
> More to the point, virtually every senior member of Presidential administrations do this almost blatantly, big-D or big-R, doesn't matter. This is the sort of cynical thing people say because other people say it. Spiro Agnew did it, sure. That was a while ago. What are your other examples? Since virtually every member does this, you should have hundreds. And remember you need a roughly balanced count of Republicans and Democrats. Obama was in office for 8 years. That should be quite a pile. Pure cynicism is an argument against rules and accountability generally.
- AtlasBarfed 5y ago
  It used to simply be the revolving door back to executive industry positions, which is what ALL the FCC and their ilk are headed by. Those exec positions used to function as the main "deferred bribery" mechanism, because who can question someone getting another job once the administration job ended? You mentioned the Obama administration, I remember the massive criticism early in his admin with the number of revolving door appointees to the various industry-focuses administration positions. The pay cuts they had to take for "public service", and the "oh look at their sacrifice to their country". OH PLEASE. PLEASE. Now since citizens united, it's my impression that the lobbying industry / K street is now completely awash in money even moreso and that is the main source of "deferred bribery". I think near the end of the Obama admin there was going to be a rule change about joining a lobbying firm when you were done with congress. Holy crap did a lot of congress quit all of a sudden. They were cashing in. Rudy Giuliani made a million bucks a year from his law firm. Why? He's not a good lawyer. There is also cush jobs for family members and numerous other ways to do such things. Biden's son is an example, I've seen really crummy stories around Clarence Thomas's family a decade ago that made me realize the Supreme Court was far from an ivory tower immune to corporate influence. Let me ask you a question: why does EVERY SINGLE, D or R, president take a trip to Saudi Arabia near the end of their presidencies? They are the effing president of the USA and they travel TO Saudi Arabia to basically kiss the royal family's butt? Washington is AWASH in money. Yet nobody significant, the central focus of the all that lobbying money, goes to jail. This is hilariously like NCAA football, but with less scrutiny, far more money. Everyone knows its going on, nobody talks about it, sometimes someone gets busted for going "too far".

dylan604 5y ago

Oh please. Ever watched Mad Men, or any other tv/film that shows the wining and dining of prospective clients by a sales person/team? Every time a sales person spends money on a prospective client is written off as an expense, so the gov't is pretty much condoning it. There are tons of stories of big pharma sending doctors to lavish resorts in the guise of a "conference". Ever heard of payola? The music business has been based on bribes. Why would you think of the film business being different? Hell, the states are involved just as much with tax incentives to entice productions to use their state/cities as location for that production. You're being quite cynical trying to wrap any person with knowledge of these payout schemes as being involved/complicit.

gnatman 5y ago
Mad Men is a fictional TV show set in the 1950s. "Big Pharma" sending doctors to resorts is now illegal in the US under the Sunshine Act.
- twelve40 5y ago
  I'm always amazed at how people around me really think this way. Yes, every high school chemistry teacher is a meth overlord, and you can just walk into Bank of Spain and rob it, haven't you seen it? facepalm
  - dylan604 5y ago
    You're sarcasm is so good, I can't tell which direction it is aimed. That's pretty impressive. Yes, I know my chem101 teacher wasn't Heisenberg. Yes, I understand how TV is fiction. However, are you really so thick to not realize that fiction is based on reality. Fiction isn't written in a vaccum, and the most interesting plots are typically based on some real situation the author has experienced, seen/heard, etc. Yes, it is dramatized to make the really boring parts interesting so people tune in, but come on. If you don't think a Don Draper/Walter White type existed as a single person or an amalgamation of multiple people then you just have your head in the sand. Using modern TV/Film/media in examples isn't a cluelessness on the speaker's part. It's used as something much more relatable than an esoteric story that you might or might not be able to provide a link to.

__alexs 5y ago

The behaviour of many execs I have worked with would be explained well by this sort of arrangement, but it could equally have been a mix of stubbornness and having no clue. It's politer to assume it was corruption.

deleted 5y ago

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handrous 5y ago

Those of us not in elite circles have a little trouble getting worked up over the difference between something that looks like it's scummy, immoral cheating, but is legal, or the same, but illegal. Same played out with the college entrance scandal. "Bribery is great and we love it a bunch—unless you do it wrong because you're not rich enough to do it right, then it's a big ol' no-no" is the message a great many received from that one.

FooBarBizBazz 5y ago

The first time I heard someone talk about a "commission" in this context, I was totally confused -- "I thought salespeople got commissions, not customers?" -- until it all snapped into focus and I was like: "Oh." And from the way they talked, this was normal for B2B sales? So then I look at some decisions that have been made in companies where I've worked, and I wonder...

indymike 5y ago

> I can't tell how much of it is random people projecting their cynicism onto the business world, or if it's people who have been part of bribery/kickback schemes themselves trying to normalize the behavior online. I think most people don't understand the difference between an agreed to agency fee/reseller margin deal, a direct incentive program, and someone just taking money, on the side. Direct Incentives (also call spiffs) are where a supplier pays a bonus directly to the person who sold the deal. These are always agreed to between the companies and reported. Without permission of the employer, they could be very illegal or a major violation of your employment contract.

hintymad 5y ago

A rumor is that Reed Hastings made it his personal mission to ensure that Kail gets the right punishment for he breach the trust of freedom-and-responsibility that Netflix gave to its employees.

throw7 5y ago

Well, do you think our politicians aren't in the same position of the esteemed Michael Kail, VP of Netflix IT Operations? People in power are going to be hit with sex, money, or power. Money, it seems, is just the easiest attack vector.