IBM pays US$10m to settle Asia bribes claim

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IBM pays US$10m to settle Asia bribes claim

Neither denies nor admits allegations.

IBM has agreed to pay US$10 million to the Securities and Exchange Commission (SEC) to settle claims that its Korean and Chinese staff bribed those nations’ officials.

Staff from IBM’s “LG-IBM” Korean joint venture were accused of providing bribes between 1998 and 2003, either directly to officials or through one of its business partners, according to the SEC's civil complaint [pdf].

The alleged bribes were said to have helped IBM secure several personal computer and storage deals over the period.

An IBM executive was also accused of handing a South Korean official a “shopping bag containing a large IBM-Korea envelope” filled with around US$20,000 cash, which allegedly helped net a US$13 million mainframe deal, according to the complaint. 

Another IBM direct sales manager was accused of funding payments he'd made to the account of a “hostess in a drink shop” by selling IBM laptops wrongly billed to the government agency. 

Complaints against IBM’s Chinese investment and Global Services subsidiaries centred on a “slush fund” at travel agencies and business partners that was used to cover officials' travel expenses.

The SEC alleged several key IBM-China employees and “more than 100 overall” had engaged in the widespread practice of providing “cash payments, gifts, and travel and entertainment”.  

It said IBM had “deficient internal controls” to prevent its staff from breaching its policy against bribery and noted Big Blue had failed to keep records of the payments.

"Without admitting or denying the SEC’s allegations, IBM consented to the entry of a final judgment that permanently enjoins the company from violating the books and records and internal control provisions of the Foreign Corrupt Practices Act," the SEC said in a statement

A spokesperson for IBM told the Financial Times that the company “took the appropriate measures to address the issues after it became aware.”

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