Legal News

On Big Blue and Bribery: IBM Settles SEC Charges for $10M

By Ashby Jones

Well, the allegations weren’t necessarily all that eye-opening, and the settlement amount was relatively small.

But hey, it’s IBM and the Foreign Corrupt Practices Act — we’re not going to let the sun fall on Friday without telling you about it.

The news: IBM on Friday reached a $10 million settlement with the SEC over foreign bribery charges.

The commission had accused the company of a decade-long campaign of bribery in Asia, saying employees handed over shopping bags stuffed with cash in South Korea and arranged junkets for government officials in China in exchange for millions of dollars in contracts. Click here for the WSJ story; here for the SEC complaint, which was unveiled Friday.

The SEC alleged “widespread” payment of bribes by more than 100 employees of IBM subsidiaries and a joint venture from 1998 to 2009. In exchange for the payments, the Securities and Exchange Commission said, IBM received contracts for computer gear.

IBM, which neither admitted nor denied the charges, said it holds employees to high ethical standards and has taken “appropriate remedial action” to address the issues raised by the U.S. government, though it wouldn’t be more specific.

The complaint details bribes totaling hundreds of thousands of dollars in cash, laptop computers, cameras, travel and entertainment expenses that were routinely gifted to government officials by IBM employees over the course of a decade in exchange for millions of dollars of government business.

From 1998 to 2002, the SEC alleges, IBM employees in South Korea paid off 16 South Korean government officials, including stuffing cash into shopping bags and IBM envelopes and handing them over in secret meetings in parking lots near an official’s office and home, and in one case in the parking lot of a Japanese restaurant.

The settlement included $5.3 million in disgorged profit, $2.7 million in interest and a penalty of $2 million. The payment is relatively small for an FCPA civil case, which may reflect that the alleged bribes, while pervasive, weren’t very large.

Full post as published by Law Blog - WSJ.com on March 18, 2011 (boomark / email).