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IBM Agreed to Pay $10 Million Against Bribery Charges

The Wall Street Journal reported, that U.S. regulators accused Armonk, N.Y., technology giant International Business Machines Corp. of a decade-long campaign of bribery in Asia, saying employees handed over shopping bags stuffed with cash in South Korea and arranged junkets for government officials in China in exchange for millions of dollars in contracts.

IBM agreed to pay $10 million to settle the civil charges, which allege “widespread” payment of bribes by more than 100 employees of IBM subsidiaries and a joint venture from 1998 to 2009. The charges ding IBM’s reputation at a time when the company is looking to countries like China, India and Brazil to fuel much of its growth. IBM’s emerging market revenue rose 16% last year and accounted for more than a fifth of the company’s $99.9 billion total.

The SEC complaint alleges that managers employed by an IBM subsidiary and joint venture in South Korea paid government officials the equivalent of $207,000 in cash bribes from 1998 to 2003 to secure the sale of mainframes and personal computers to the government.

In some instances, IBM employees also provided entertainment to government officials, including depositing payments into the bank account of a “hostess in a drink shop,” according to the SEC complaint.

The complaint details bribes totaling hundreds of thousands of dollars in cash, laptop computers, cameras, travel and entertainment expenses that were routinely gifted to government officials by IBM employees over the course of a decade in exchange for millions of dollars of government business.

IBM, which neither admitted nor denied the charges, said it holds employees to high ethical standards and has taken “appropriate remedial action” to address the issues raised by the U.S. government, though it wouldn’t be more specific.


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