IBM sued for cooperating with NSA for spy program

IBM is being sued for not disclosing the risks to its business when cooperating with the NSA for the agency's spy program.
Written by Michael Lee, Contributor

IBM is being sued by one of its shareholders over its alleged failure to disclose its involvement in the US National Security Agency's (NSA) spy program and subsequent loss of business.

According to Reuters, the Louisiana Sheriffs' Pension and Relief Fund is suing the technology giant's CEO Virginia Rometty and CFO Mark Loughridge for failing to reveal the risk of tying the company to the NSA.

In November, the Center for Strategic Studies in Washington noted that IBM, along with Cisco and Microsoft, appeared to be stonewalled by China in response to media reports that US companies were aiding the NSA.

IBM reported a 22 percent revenue loss from China in October, and a 4 percent drop in its Q3 profits. In September, Microsoft also noted that China is its weakest market.

In May this year, at the AusCERT conference and prior to the first reports of the NSA's spy program, retired US Marine Corps Lieutenant Colonel Bill Hagestad made the remark that if the tensions between China and the US escalated, it would have profound consequences for a company like Cisco.

"I predict that within five years, there's a little company in San Francisco Bay that will cease to exist because China, the biggest customer of Cisco, is going to pull it all out," he said at the time.

The NSA has been under fire for a number of controversial actions it has taken in the interests of collecting intelligence. These have included spying on the Mexican and German presidents, installing surveillance equipment at foreign embassies, creating malware that infected over 50,000 computers, breaking into Microsoft and Google's networks, and even infiltrating online multiplayer games.

Its operations have not been especially clean, either. Although it attempts to minimise spying on US persons, these rules are often ignored, or left to a foreign nation to check. Additionally, it has been found to be promising its allies that it won't spy on them, then behind closed doors, doing it anyway.

Editorial standards