Those in power nevertheless managed to exploit the system. Roman emperors were in the habit of financing their wars by reducing the precious metal content of their coins. This resulted in higher seignorage revenues from each coin issued. For a period, these revenues  2  BIS Review 136/2008  were sufficient to finance an army, a long war or several monuments. This is the number one temptation facing money issuers. Henry VIII of England was one of the most renowned exponents of this kind of behaviour. 6 In the 1500s, he reduced the silver content in coins to 1/3 of the original to finance wars against France and his own expensive lifestyle. In addition to coins, a system gradually developed involving paper money. Banknotes were a receipt for a money issuer’s claims on silver or gold. Instead of using coins as a means of payment, the receipt was used. This was more practical, but with the introduction of banknotes the authorities also introduced a new promise. They promised the bearer that they would redeem the nominal value of the notes in silver or gold. The value of the notes was entirely dependent on confidence in the issuer’s promise. The authorities’ ability to fulfil their promise depended on government finances. Brutal tax collectors, abundant tax coffers and peace with neighbouring countries inspired confidence in the authorities’ ability to redeem the notes in a precious metal then or at some time in the future.
Another example is the construction and engineering firm Odebrecht SA using its subsidiaries and shell companies in the British Virgin Islands and Belize to facilitate at least $ million in kickbacks to government officials and political parties. The schemes involved paying consulting and agency fees to shell companies who then facilitated payments to government officials. The most prominent scheme involved Petrobras, the energy company majority owned by the government of Brazil. The U.S. government worked with law enforcement in Brazil and brought criminal charges against Odebrecht and was able to recover billions from Odebrecht and related entities to help offset the theft of national resources. And the FIFA Scandal put a spotlight on corruption in sports – there was a global cabal of FIFA officials directing corrupt payments to executives around the globe controlling “futbol” clubs, or media companies with broadcasting rights to futbol events. Although these payments did not steal government funds, they did impact nonprofit schools and futbol clubs that were supposed to be the recipient of much of these funds. Multiple officials from clubs around the globe were prosecuted in the U.S. for those violations. One common theme in cases like these is that they tend to occur in countries where the powerful can easily take advantage of limited or immature internal controls. As is typical with most classic fraud triangle schemes, these people had the motivation (greed or perceived financial pressure), opportunity (powerful positions with weak internal controls), and rationalization (they deserved the kickback for years of hard work).