In business and commerce, a kickback refers to a form of bribery or unethical practice where someone, typically an employee or a contractor, receives money, goods, or services in exchange for providing favourable treatment or business opportunities to another person or entity. Kickbacks are considered illegal and unethical because they involve corrupt practices that undermine fair competition and transparency in business transactions.
Here’s how a kickback typically works:
1. Offer: An individual or organization offers a kickback to someone who holds a position of authority or decision-making power within a business transaction. This could be an employee, manager, contractor, or anyone with the ability to influence a decision.
2. Acceptance: The person in the position of power accepts the kickback, which could be in the form of cash, gifts, discounts, vacations, or other valuable items or services.
3. Favourable Treatment: In return for the kickback, the person in power provides favourable treatment to the individual or organization offering the kickback. This could include awarding them a contract, making purchasing decisions in their favour, or providing other business opportunities.
Kickbacks are illegal in most countries and can have severe legal consequences for those involved. They are considered a form of corruption that distorts fair competition and can result in financial losses for businesses and harm the overall economy. Many countries have laws and regulations in place to prevent and punish kickbacks, and organizations often have strict anti-corruption policies and codes of ethics to deter such unethical practices within their ranks.