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What is a Slush Fund?

By Garry Crystal
Updated May 16, 2024
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The slush fund is every corrupt politician's or government's ideal, a secret stockpile of money skimmed from an otherwise legal or secret source. It can also become the same corrupt politician's or government's downfall when word leaks out and the slush funds are exposed. The phrase slush fund brings to mind corruption, illegal deals and illegally obtained sums of money. History is littered with numerous examples of the slush fund in action. It is mainly associated with politicians, governments and corporations.

There are some innocent examples of a slush fund, such as monies that are kept aside by companies for purposes such as entertainment. The term is also used by many businesses to describe funds used for extra travel and entertainment expenses. However, the term slush fund generally refers to money that cannot be legally accounted for.

It has been well proven by many an intrepid investigative journalist that slush funds operate in every possible scenario. Virtually every government's secret service department uses money from slush funds outside of their original budget. This money is mainly used to bribe people. Politicians regularly use money to buy votes or to maintain a lavish lifestyle.

Many corporations and businesses use a slush fund to hide money. A certain amount of the year’s profits may be hidden and added to a following quarter’s financial statistics. This method is used in case there is not enough money in a following bad period to pay for bonuses or extra expenses.

The big money made from illegal slush funds can run into the billions. Misdirection of funds and false invoicing are rife in government and business. Banks, religious groups and multinationals have all been found guilty of hiding funds. They are usually hidden away safely in offshore accounts and used for personal purposes.

One clever method of hoarding money, used by businesses and politicians, is the fake job. Job roles are created for numerous people who do not actually exist. The money from these services is then stockpiled away under the heading of consultancy services.

Examples of the slush fund in practice can be seen in almost every country in the world. In 2002, Spain's second largest bank was found to have stockpiled almost 200 million US dollars (USD) in secret accounts. The money was supposedly used to manipulate politicians and to pay off terrorist organizations. Illegal accounts paid for the bank's board members to receive tax free pensions totalling 20 million USD.

Many politicians and governments see the slush fund as a part of business. It is often considered the way of modern business, and many do not consider it illegal until their case comes to court. The sad fact is that the penalties and fines handed out do not outweigh the benefits people reap from the slush fund. It has been the same way throughout history and does not appear likely to change in the future.

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