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March 22, 2011

IBM Pays $10 Million to Settle FCPA Case

by jparker

IBM has agreed to pay a settlement of $10 million to settle civil charges that it bribed Chinese and South Korean government officials to obtain computer equipment contracts.  The The Wall Street Journal that the SEC is suing the company over cash bribes that violate provisions of the Foreign Corrupt Practices Act (FCPA).  IBM did not admit to wrongdoing, but did say it has higher ethical standards for its employees and had taken “appropriate remedial action,” according to the WSJ report.

The SEC’s suit accuses employees in the South Korea offices of the tech giant of paying government officials $207,000 and providing travel, entertainment, and gifts of cameras and laptops in exchange for a contract to supply PCs and mainframes to the government.  The SEC complaint also alleges that more than 100 employees and two top officials of IBM in China paid for the vacations of Chinese government representatives, through slush funds established at travel agencies.

This case raises the issue of how difficult it is to make your corporate ethics statement a reality around the world.  It is almost certain that IBM maintained a code of ethics that would prevent this type of behavior but this did not prevent “widespread” bribery involving over 100 employees.  PCG Global now offers FCPA/Ethics training targeted directly to front-line employees who have to make decisions about bribes, ethics, and corruption in their normal course of work without direct supervision.  Contact us to find out how we can customize and deliver this training to your organization in your most critical areas of operation.

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