EDS says it was a victim

EDS says it was a victim

Summary: EDS falls foul to procurement scam

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TOPICS: Hardware
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Electronic Data Systems admitted on Wednesday that a group of con artists got their hands on "tens of millions of dollars" worth of computer audio and video equipment that was supposedly going to be used for a top-secret project abroad.

It was such a secret that no-one was around to pick up the cheque.

For a company as huge as EDS, this little fiasco isn't that big of a deal. In fiscal 1999, the computer services company earned $957m (£593m) and change on sales of $18.5bn (£11.4bn). Losing $10m (£6.2m) or $20m (£12.4m) or even $30m (£18.6m) is just a drop in the bucket.

Unfortunately, it appears a couple other smaller companies were sucked into this web of deceit. EDS, according to company officials, was merely serving as the coordinator for what the thieves called "a highly sensitive voice-recognition project for NATO". While details are still very sketchy at this point, it appears that a group of individuals posing as NATO and US Air Force officers worked a procurement scam for this bogus voice-recognition project supposedly taking place in The Netherlands.

This all began back in 1997, EDS said.

Once the equipment was shipped to The Netherlands, it and the "customers" disappeared. EDS said it promptly notified the FBI and other local and international authorities after it figured out something was amiss sometime late last year. Whether that was immediately after the goods were shipped or after the company realised it couldn't track the men down is unclear at this point.

Despite the embarrassment, EDS bravely stepped forward to reassure investors that it was covered, claiming the scandal would have no material impact on its financial results.

It also said that it had "good and meritorious defences" against two lawsuits filed by two vendors who got suckered in as well. One of those lawsuits, according to various reports, was filed in Fort Worth, Texas, by Akai Musical Instrument Corporation.

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Topic: Hardware

About

Larry Barrett is a freelance journalist and blogger who has covered the information technology and business sectors for more than 15 years.

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