SEC sues IBM over alleged bribes
Friday, March 18, 2011; 6:08 PM
SAN FRANCISCO -- IBM Corp. has agreed to pay $10 million to settle allegations that it bribed South Korean and Chinese government officials for more than a decade to win contracts.
The Securities and Exchange Commission accused the technology company of making roughly half that amount in profit from the behavior.
Managers at an IBM subsidiary and joint venture allegedly paid $207,000 in bribes to South Korean officials from 1998 to 2003. From 2004 until 2009, more than 100 IBM employees in China provided improper overseas trips, entertainment and other gifts for officials, the SEC alleged.
The SEC said lack of internal controls allowed IBM managers to use local business partners and travel agencies as conduits for bribes in those countries.
"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 company based in Armonk, N.Y., said in a statement.
The SEC's lawsuit said that during the period in question, IBM had corporate policies in place prohibiting bribery but didn't keep accurate records of its payments in South Korea and China. The allegedly improper payments were recorded as legitimate business expenses, according to the SEC.
IBM's stock rose $1.71, or 1.1 percent, to close Friday at $155.89 amid a broad-based rally on Wall Street.