International Business Machines Corp. said on March 2011 it had settled with U.S regulators. The company is alleged of offering bribes to Chinese and South Korean officials to win the Government contracts of $ 54 million.
The deal has not yet been approved by the federal judge in Washington. The SEC is dealing with 33 more this type of bribery cases since 2010. In the last case 3 months ago a company failed to win from judicial sign-off.
There is a delay in making a decision but the reasons behind it are not publicly evident. Richard Leon , U.S district judge made a request to take more time to respond to comments.
According to Stephen Crimmins, a former SEC official commented that, maybe the SEC is evaluating whether the proposed deal of settlement is in the public interest.
The company without revealing the fact about its illegal practices, agreed to pay $10 million in disgorgement and penalty against the allegation of violation of accounting record books and internal control provision of foreign the Corrupt Practices Act or FCPA.
According to the SEC lawsuit the alleged payment was made by the employees of three subsidiary companies, those are New Work based IBM, LG IBM PC Co. and LC Electronic Inc.
The cash payment to the South Korean officials amounting to $ 207,000 from 1998 to 2003 were in any way connected to $ 54 million government contract as per SEC.
The International Business Machines Corp. (NYSE:IBM)’s employee created a “slush fund” at china’s local travel agency which is used to pay for an overseas excursion by government officials as per the complaint. International Business Machines Corp. (NYSE:IBM) employee also distributed mobile and laptops to the officials.
But The SEC did not mention what in turn International Business Machines Corp. is received from them.
On March 18, the complaint is filed and the first hearing was made just two weeks later. The SEC submitted a revised consent and final judgement to Leon that removed references to a certain section of law with $10,000 as penalty. But the SEC complaint against bribery, focusing to the violation of books and record, raising their concerns whether the company could seek $ 5.3 in disgorgement.
According to Mr. Mike Koehler, a professor of butler university doubted, it is difficult for the part of the company to meet a disgorgement remedy for mis-recording of a payment,
Since the starting date of the lawsuit Leon has not held a single public hearing. Only three private meetings took place in his chamber. He had not asked to submit any additional legal filing to any parties.
International Business Machines Corp. did not show any interest in the settlement.