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Cath Everett

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IBM settles out of court for bribery campaign

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IBM has agreed to pay $10 million to US regulators in order to settle accusations of a decade-long campaign of bribery in China and South Korea out-of-court.

 
The Securities and Exchange Commission alleged that the world’s largest computer company had given cash and gifts, which included travel and entertainment, to Chinese and South Korean officials between 1998 and 2009. The bribes were connected with about $54 million in government contracts and IBM made about $5 million in additional profits from the arrangement, it added.
 
The vendor neither admitted nor denied any wrongdoing but agreed to pay $5.3 million in disgorgement, $2.7 million in interest and $2 million to settle a lawsuit filed by the SEC late last week. The suit claimed that improper payments were made by staff at three of the firm’s subsidiaries as well as at LG IBM PC Co, a joint venture with LG Electronics.
 
“Deficient internal controls allowed employees of IBM’s subsidiaries and joint venture to use local business partners and travel agencies as conduits for bribes or other improper payments to South Korean and Chinese government officials over long periods of time,” the SEC’s complaint said.
 
Cash payments made to 16 South Korean officials between 1998 and 2003 totalled $207,000 and some of the money was delivered in shopping bags at specific drop-off locations such as restaurants and car parks, the documents claimed.
 
More than 100 IBM China employees were also implicated in handling slush funds at local travel agencies, which were used to pay for overseas trips by Chinese government officials. They also received gifts such as cameras and laptops, the SEC said.
 
IBM spokesman Doug Shelton said in an email statement to the Bloomberg newswire: “IBM insists on the highest ethical standards in the conduct of its business and requires all employees to follow its policies and procedures for conducting business.”
 
The settlement requires approval by a federal judge, but Alisa Finelli, a spokeswoman at the Justice Department declined to comment on whether a criminal investigation was likely to follow.

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