The words ‘slush fund’ have developed a very negative connotation over the years. This is largely due to the fact that such money is often associated with breaking the law. There have been plenty of sensational media stories where corrupt politicians or business people have had money hidden away in their slush fund. Although this type of set aside money is often viewed negatively there are actually some very legitimate reasons for why a business or organization might have such a fund.
So what is a Slush Fund?
In basic terms a slush fund is a reserve fund of money that may not have a designated purpose. A lot of companies like to put a bit of money aside to pay for parties and other types of entertainment. This is a perfectly legitimate practice and very common. The word slush fund though has become so associated with wrongdoing that many businesses will no longer refer to this legitimate reserve fund by that name.
What we now usually mean by a slush fund is money that is hidden and not legally accounted for. If a corporation has had huge profits they may decide not to declare it all. Instead they will hide a percentage of it as a slush fund. They may decide to do this in case profits are lower the in the following financial period; they will be able to create a rosier picture by adding the money that wasn’t declared the year before.
Slush Fund Riches
In many instances the purpose of slush funds will be to allow people to get rich illegally. There is probably billions of dollars hidden in this way and most people involved in this criminality seem to get away with it. The punishment for being caught can be severe, but the rewards are so high that a lot of people will be tempted. It isn’t only business and corrupt politicians who are involved in this activity; it can also involve whole governments. Slush funds are created by using false invoicing and misdirecting funds. The real worry is that this type of criminality can be extremely easy for those in power to pull off.
In the business world there is a tacit acceptance of slush funds. It may be illegal but a lot of people just accept it as the way things are done — there are many who even try to justify it as necessary. It is only on those rare occasions that somebody gets caught and sent to jail that people will show their disapproval at such practices. It can sometimes feel like the one who is caught is a martyr for the cause. It seems that so long as a regular fall guy can be found business is able to go on as usual. Most slush funds will never be discovered and only a tiny minority of those involved in this type of practice will ever be caught. This is why such practice is unlikely to ever go away.