Settlements

ST-216
International Business Machines Corporation (IBM) / 2011 Settlement (South Korea and China)
International Business Machines (South Korea and China)
United States
Securities and Exchange Commission
China, South Korea
2011
03/18
Unknown
Legal Person
Civil
Consent to Final Judgment
Disgorgement of Profits, Prejudgment Interest, Civil Penalty
$10,000,000.00
$5,300,000
$2,700,000
$2,000,000
$0
Art.16, Art.26
Art. 1, Art. 2, Art. 8
Falsification of books and records, Internal controls violation
No admission or denial of allegations
Yes
On March 18, 2011, the US Securities and Exchange Commission filed a settled civil complaint after International Business Marchines Corporation, charging the company with violation of the books and records and internal controls provisions of the Foreign Corrupt Practices Act. The SEC alleged (1) in South Korea, from 1998-2003, employees of IBM Korea, Inc., an IBM subsidiary and LG IBM PC Co., Ltd., a joint venture in which IBM held a majority interest, paid cash bribes (approximately $135,558 by IBM-Korea and $71,599 by LG-IBM Korea) and provided improper gifts and payments of travel and entertainment expenses to various government officials in South korea in order to secure the sale of IBM products. The payments were alleged to have been made to "South Korean Government Entities"(SKGE) as SKGE 1, SKGE 2, SKGE 3, SKGE 3, SKGE 4, SKGE 5 and SKGE 6; (2) in China, between 2004 to early 2009, IBM China, a Hong Kong company owned by IBM, employees created slush funds at local travel agencies in China that were used to pay for overseas and other travel expenses incurred by Chinese government officials, and created slush funds at its business partners to provide a cash payment and improper gifts such as cameras and laptops to Chinese government officials. The complaint does not identify the involved Chinese officials. (Source: Securities and Exchange Commission v. International Business Machines Corporation, Case No. 1:11-cv-00563 (D.D.C.), Complaint filed March 18, 2011.)