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My experience shows that the IT Consultant debacle starts at scenario #1.

It can be painful, but I never crossed the line of scenario #1. In my last consultancy I was required to tell some "white lies" concerning to the compliance with SarbOx Act. Things related to business continuity and disaster recover. My reply was that it would be futile because any audit would expose the lie.

Morale: the guys didn't get the contract and I was expelled. Bad for me? No, not at all. I discovered that they're running into Article 180 of our Criminal/Penal code and also into Art. 12 of law 6368/76...