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SEC sues IBM over China, South Korea alleged bribes

By | March 18, 2011, 10:44am PDT

Summary: The Securities and Exchange Commission sued IBM for allegedly bribing South Korean and Chinese government officials.

The Securities and Exchange Commission on Friday sued IBM for allegedly bribing South Korean and Chinese officials.

According to the SEC complaint, posted by the Wall Street Journal, IBM units allegedly bribed these government officials for more than a decade. Bribes included cash, gifts and travel.

IBM agreed to pay $10 million to settle the civil charges without admitting or denying guilt. The settlement is pending court approval.

Among the key details:

  • From 1998 to 2003, employees of IBM Korea and LG IBM PC, a joint venture where IBM owned a majority interest, paid government officials $207,000 in bribes.
  • From 2004 to early 2009, more than 100 employees in various IBM China units handed out improper gifts.
  • IBM lacked the internal processes to police these employees. The alleged bribes were recorded as regular expenses.

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Topics

Bribe, SEC, IBM Corp., Litigation, Desktops, Business Operations, Hardware, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

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RE: SEC sues IBM over China, South Korea alleged bribes
tringo007 27th Sep
You actually make it seem so easy with your presentation but I find this matter to be actually something that I think I would never understand. It seems too complicated and very broad for me. I'm looking forward for your next post, I will try to get the hang of it! foreign exchange programs
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M$ is next!
Linux Geek 18th Mar 2011
the bribes paid by M$ are in the billions!
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Now we see how Linux "grows"
Will Farrell Updated - 18th Mar 2011
@Linux Geek
I guess Linux really IS a money making OS - IBM will pay you to use it!

AWSOME!
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But IBM admitted guilt
iPad-awan 18th Mar 2011
by agreeing to pay $10 million to settle the civil charges... Or is the $10 million just another bride to SEC to not pursue the matter
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RE: SEC sues IBM over China, South Korea alleged bribes
happyharry_z 18th Mar 2011
@iPad-awan HA HA! I guess SEC wanted a piece of the action...
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Not a bad idea
John Zern 18th Mar 2011
@iPad-awan
As long as the bribes and fines are less then the income, its a win for IBM
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Precisely...
John L. Ries 19th Mar 2011
@iPad-awan
...why I think the "neither admitting nor denying guilt" dodge should be disallowed. Either the defendant is guilty and should be punished, or not guilty and should be exonerated.
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RE: SEC sues IBM over China, South Korea alleged bribes
Me_too 21st Mar 2011
@iPad-awan "Or is the $10 million just another bride to SEC to not pursue the matter "

I think not. It's either settle the mater out of court or let the lawyers have a field day defending them while charging them 100 mega$ to 10 Giga$.

Assuming you had the $$$ which would you do?

Unless when they were passing out brains and the few nerve cells you had miss took it as trains, and you said "no, I ain't going on a long trip. I'll just take a car."
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Brother Love's Traveling Salvation Show
Robert Hahn 19th Mar 2011
Well, aren't we just the purest, most corruption-free country on Earth. We make our own companies pay our government officials if our government officials catch them making payments to some other country's government officials.

I am shocked -- I say SHOCKED -- to learn that there are bribes in China.
0 Votes
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RE: SEC sues IBM over China, South Korea alleged bribes
tringo007 27th Sep
You actually make it seem so easy with your presentation but I find this matter to be actually something that I think I would never understand. It seems too complicated and very broad for me. I'm looking forward for your next post, I will try to get the hang of it! foreign exchange programs
0 Votes
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RE: SEC sues IBM over China, South Korea alleged bribes
AndyPagin 20th Mar 2011
Unfortunately if you step outside the USA or Europe bribery is a standard business practice. No one likes it but companies that don't participate don't win the contracts.
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RE: SEC sues IBM over China, South Korea alleged bribes
aiellenon 22nd Mar 2011
@AndyPagin
hitting the nail on the head there...
I am suprised that anyone could possibly think bribes were not in place with every large company that is doing business outside of america
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RE: SEC sues IBM over China, South Korea alleged bribes
bobatwork 21st Mar 2011
"The alleged bribes were recorded as regular expenses."
Oh, sorry. Let's see... which column of the spreadsheet is for "bribes and corruption? Really? Maybe they should have marked them down under advertizing and marketing.
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RE: SEC sues IBM over China, South Korea alleged bribes
Mattwm 21st Mar 2011
what were the bribes for? and uhm, who cares?
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RE: SEC sues IBM over China, South Korea alleged bribes
Dalece 21st Mar 2011
Yep another case where no one goes to jail. But if you or I did it, we would be in the Federal Pen for 20 years! Isn't it time we got back to democracy in this country where the rights of the individual mattered and the US stop protecting big business.
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RE: SEC sues IBM over China, South Korea alleged bribes
Me_too 21st Mar 2011
What is it that the SEC does not understand about bribes in China and South Korea being the only way to do business there?

What is it that IBM does not understand about bribes can not be written off as expenses?

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