And here's the trick: they use insiders to negotiate these deals, give massive kickbacks, and sometimes literally take over and destroy their victim (and i literally heard this term for a 'client' in outsourcer chats - 'victim')

Yep. I'm pretty sure the people who negotiated this "deal" did it for their own self interest, since they later went to work for the contractor directly. Too bad. We could've hired some solid independent developers.