IBM probed by U.S. Justice Dept. over bribery allegations

IBM probed by U.S. Justice Dept. over bribery allegations

Summary: IBM disclosed in a recent filing that it is being investigated by the Justice Dept. over corruption allegations in four countries in Europe, Asia, and Latin America.

TOPICS: IBM, Government US

IBM is being investigated by the U.S. Justice Department over corruption claims in a number of European and Asian countries, according to a government document.

In the company's latest 10-Q filing with the U.S. Securities and Exchange Commission (SEC), further bribery charges are being added to the ones it already faces from the SEC over its activities in China and South Korea.

The new Justice Dept. probe relates to allegations of corruption in Argentina, Bangladesh, Poland, and Ukraine.

In the April 30 filing, IBM is being investigated to see whether or not it falls foul of the U.S. Foreign Corrupt Practices Act (FCPA), which makes it illegal under U.S. law to bribe foreign government officials to win business — even if the acts are not committed on U.S. soil.

IBM said that in early 2012, it informed the SEC that Polish anti-corruption officials were probing allegations of "illegal activity" by a former IBM Poland employee "in connection with sales to the Polish government." But months later in April, the company disclosed that it learned the Justice Dept. was also investigating the probe, suggesting transatlantic mutual legal assistance.

IBM said that it was "co-operating" with the Justice Dept. on the matter.

It's not uncommon for companies to face scrutiny under the act. The news comes only weeks after the Justice Dept. and the SEC were also investigating claims of bribery made by a former representative of the company in China. 

But now, IBM faces a potential backlash from two government departments in multiple jurisdictions.

In March 2011, IBM settled for $10 million with the SEC covering claims that it paid officials to win $54 million in government contracts in Asia. Slammed by the judge presiding over the case, U.S. District Judge Richard Leon said IBM had "a history of violating the books and records provision of the FCPA," according to Bloomberg.

Topics: IBM, Government US

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • the DoJ should focus on M$

    where the real corruption lies.
    LlNUX Geek
    • Wow

      Love my job, since I've been bringing in $5600… I sit at home, music playing while I work in front of my new iMac that I got now that I'm making it online.(Click Home information)
  • All too common, unfortunately...

    While many of these banking programs might actually run better under WINE, while the cost may be lower for Linux versions of many products, and the products may even be superior in some won't matter to many in upper management; because have a preconceived notion about Microsoft, in the backs of their mind there is the thought that Solitaire, WinMine, or some other time wasting app\game might not work, and they operate under the fear that such a solution will put them at the mercy of a specialized IT staff, not willing to acknowledge that a Windows server solution is no less complicated.
    • Please delete my post, totally off topic mispost

      ...totally off topic mispost .
  • The last paragraph shows what is wrong...

    ...with the US court system in cases like these.

    In March 2011, IBM settled for $10 million with the SEC covering claims that it paid officials to win $54 million in government contracts in Asia.

    $54M in contracts minus $10M in fines = $44M in PROFIT after paying the fine.

    The fine should always be greater than the original amount being changed in the case.
    • Have to agree...

      even factoring in costs, the fine was not large enough to prevent bad employees from doing it again. Hopefully some people at IBM spent a little time in jail. We wonder why we have to continue to make new laws? It is because existing laws for people intentionally flaunting the system are not enforced and settlements happen too easily. It happened in the banking crisis as well as the UBS Swiss Bank Tax evasion scheme. It is one thing when someone accidentally makes a mistake, but when people intentially flaunt the system, they should be made to pay a penalty that is severe enough to deter them from doing it.
  • You need to do some math

    $54M in Contracts, probably about 10 -12% Net profit depending on the nature of what is being provided, i.e. $49M total costs and overheads = $5M profit minus $10M fines = $5M LOSS immediately.
    • Math!

      So, you're saying there's some value in Jr. High math after all? :)
  • Yet, the U.S. is exhibit number one, when it comes to "bying" influence


    Yeah, I know. It's not corrupt and it's not bribery when the government does it.

    Hey, North Korea! We'll send you $500 million dollars worth of food and goods, if you stop building that ballistic missile. ;)