IBM Korea 'used bribes since 1998'

The bribery scandal at IBM's Korean subsidiary dates back half a decade, according to prosecutors

A South Korean prosecutor disclosed further details on Monday relating to the bribery charges and other alleged irregularities at IBM Korea, saying that bribes had been used since 1998.

The Seoul District Prosecutor's Office announced that IBM Korea, LG IBM PC and 13 related companies bought off official clients and made rigged bids for many contracts. LG IBM PC is the joint venture of LG and IBM Korea.

According to the statement, IBM Korea built up a slush fund through Winsol, an IBM Korea reseller. It then is alleged to have spent $1.3m on illegal collusion, $302,000 on a bribe and used $167,000 for the support of LG IBM's lobbying. Moreover, IBM Korea gave Winsol shares to government officials as a bribe, said the District Prosecutor.

The people who received bribes, according to the statement, were IT managers at the Korea Ministry of Information and Communications, the National Tax Service, Korea Telecom, Korea Electronics and several other public organisations. Eleven public servants have been arrested, and others have been indicted without detention.

As result of investigation, said the prosecutor, it was discovered that IBM Korea had given bribes since 1998. IBM Korea and related companies had won contracts worth $43m from the government and public organisations. Separately, LG IBM sold $725,000 worth of goods as a result of lobbying. The Seoul District Prosecutor's Office spokesman said in the statement, "The case is about intentional, illegal collusions among IT managers, hardware vendors and its resellers. We think that related official organisations should make contract process clearer."

"We don't raise slush funds," an IBM Korea representative said, "We have already fired related executives, and are making appropriate measures."