A slush fund is a fund or account used for miscellaneous income and expenses, particularly when these are corrupt or illegal. Such funds may be kept hidden and maintained separately from money that is used for legitimate purposes. Slush funds may be employed by government or corporate officials in efforts to pay influential people discreetly in return for preferential treatment, advance information (such as non-public information in financial transactions), and other services. The funds themselves may not be kept secret but the source of the funds or how they were acquired or for what purposes they are used may be hidden. Use of slush funds to influence government activities may be viewed as

subversive Subversion () refers to a process by which the values and principles of a system in place are contradicted or reversed in an attempt to sabotage the established social order and its structures of power, authority, tradition, hierarchy, and socia ...

of the democratic process. A slush fund can also be a reserve account used to reduce fluctuations in an organization's earnings by withholding them when they are high and supplementing them when they are low. This type of slush fund is not inherently corrupt, but is nonetheless a form of

earnings management Earnings management, in accounting, is the act of intentionally influencing the process of financial reporting to obtain some private gain.Schipper, Katherine. 1989. “Commentary on Earnings Management.” ''Accounting Horizons'' (December): 91� ...

that tends to mislead stakeholders about the organization's financial condition.

Examples

Richard Nixon Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 until Resignation of Richard Nixon, his resignation in 1974. A member of the Republican Party (United States), Republican ...

's " Checkers speech" of 1952 was a somewhat successful effort to dispel a scandal concerning a slush fund of campaign contributions. Years later, Nixon's presidential re-election campaign used slush funds to buy the silence of the " White House Plumbers". Financial derivative traders for

Enron Enron Corporation was an American Energy development, energy, Commodity, commodities, and services company based in Houston, Texas. It was led by Kenneth Lay and developed in 1985 via a merger between Houston Natural Gas and InterNorth, both re ...

employed a slush fund system called "prudency reserves," in which the department reported part of each trade's profit or loss to the company and withheld the remainder. This system was originally used to regulate the trading department's profits, but also enabled the company to conceal large profits during the 2000–01 California electricity crisis.

Hockey Canada Hockey Canada (which merged with the Canadian Amateur Hockey Association in 1994) is the national governing body of ice hockey and ice sledge hockey in Canada. It is a member of the International Ice Hockey Federation and controls the majority ...

maintained three slush funds to pay for sexual assault settlements perpetrated by ice hockey players and other uninsured claims. Membership fees from across Canada were used to fund at least one of these slush funds. The existence and purpose of these slush funds were discovered during the Hockey Canada sexual assault scandal in 2022. $7.6 million in 11 sexual assault settlements were paid out by these funds between 1989 and 2022.

Etymology

"Slush fund" was originally a nautical term for the cash that a ship's crew raised by selling

fat In nutrition science, nutrition, biology, and chemistry, fat usually means any ester of fatty acids, or a mixture of such chemical compound, compounds, most commonly those that occur in living beings or in food. The term often refers specif ...

(slush) scraped from cooking pots to

tallow Tallow is a rendered form of beef or mutton suet, primarily made up of triglycerides. In industry, tallow is not strictly defined as beef or mutton suet. In this context, tallow is animal fat that conforms to certain technical criteria, inc ...

makers. This cash was kept separate from the ship's accounts and used to make small purchases for the crew.Garg, Anu. A.Word.A.Day mailing list, 2017-Mar-01. http://wordsmith.org/words/slush_fund.html

References

{{Corruption Corruption Financial crimes Funds Nautical terminology

Examples

Etymology

See also

References