IBM pays millions to settle Asian bribery case

CORPORATE GOVERNANCE

US - IBM has agreed to pay US$10 million to settle charges that it gave bribes to Chinese and South Korean officials to win contracts for personal computers and related products.

The US computer giant will pay a disgorgement of US$5.3 million, interest of US$2.7 million and a civil penalty of US$2 million in an agreement with the US Securities and Exchange Commission (SEC). However, under the agreement, which is subject to court approval, IBM does not admit or deny the allegations it violated the Foreign Corrupt Practices Act.

In the complaint filed with the US District Court, SEC said IBM Korea employees allegedly handed envelopes filled with cash to South Korean officials in parking lots, gave them free laptops and tweaked bid sheets. From 1998 and 2003, employees of its Korean subsidiaries and joint venture LG IBM PC paid US$207,000 in cash and gifts to them to secure the sale of IBM products. They also made payments to a bank account of a "hostess in a drink shop".

The complaint added that from 2004 to 2009, employees of IBM China sponsored overseas trips, entertainment and improper gifts to Chinese government officials.

Korean conglomerate Samsung was not spared. One of its business units was fined US$32 million for planning to fix prices for color display tubes (CDTs), a key computer monitor component, after pleading guilty to felony charges.

The US Justice Department said Samsung SDI had hashed out the price-fixing deals with its conspirators in Taiwan, South Korea, Malaysia and China between 1997 and 2006. It added that six people related to the case have been indicted in the past two years, with 22 executives and eight companies from Japan, South Korea and Taiwan charged in the ongoing investigation. Some have pleaded guilty and agreed to pay fines totaling more than US$890 million.

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