IBM pays $10m to settle SEC bribery charges

IBM has agreed to pay $10m in charges following an investigation into bribery and false accounting allegations by the Securities and Exchange Commission (SEC).

The SEC claimed in its complaint (PDF) that IBM executives paid $207,000 in bribes to South Korean government officials.

In 1998, IBM's public sector territory manager is alleged to have handed over a shopping bag containing a large IBM Korea envelope filled with $19,093 in local currency to a government official, which resulted in a large mainframe sale.

The SEC also alleged that IBM had set up several Chinese slush funds, which were used to pay for entertainment and additional trips during training conferences. The complaint states that two senior IBM employees and more than 100 staff were involved.

"Without admitting or denying the SEC's allegations, IBM consented to the entry of a final judgement that permanently enjoins the company from violating the books and records and internal control provisions of the FCPA, codified as Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934," said the SEC in a statement.

"IBM also agreed to pay disgorgement of $5,300,000, $2,700,000 in prejudgment interest, and a $2,000,000 civil penalty."

IBM was accused of similar actions in South Korea in 2004, and the head of IBM in Argentina was arrested for corruption, but the company is by no means alone in the technology industry as a whole.

In the last year alone HP has been accused of a Russian kickback deal as well as settling bribery charges in Texas with the SEC, and an Apple manager admitted selling bidding information for $2.28m.

"IBM has agreed to settle an enforcement action with the SEC relating to activities by employees of IBM Korea and IBM China during the period from 1998 through 2009," IBM told V3.co.uk in a statement.

"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."