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About POGO's Federal Contractor Misconduct Database (FCMD)
The government awards contracts to companies with histories of misconduct such as contract fraud and environmental, ethics, and labor violations. In the absence of a centralized federal database listing instances of misconduct, the Project On Government Oversight (POGO) is providing such data. We believe that it will lead to improved contracting decisions and public access to information about how the government spends hundreds of billions of taxpayer money each year on goods and services. Report an instance of misconduct »
Ranking: 45
IBM Corporation
IBM is the world's largest information technology company with more then 90 years of leadership in helping businesses innovate. Drawing on resources from across IBM and key business partners, IBM offers a wide range of services, financing, solutions and technologies that enable customers to take full advantage of the on demand era
Federal Contract $: $1744.9m
Total Number of Instances: 15
Total Misconduct dollar amount: $ 833.9m
- Annual Report
- Ethics Page
- Hoovers Profile
- Lobbying Information
- Press Page
- SEC 10K
- Contracting Information
- Website
Instances of Misconduct
1. Compuware v. IBM (Copyright Infringement and Antitrust)
In 2002, Compuware sued IBM for copyright infringement, unfair competitive acts, and other anti-trust abuses. Compuware alleged that IBM stole a computer code from them for use in IBM’s File Manager and Fault Analyzer tools. IBM agreed to license $140 million of Compuware software over the next four years and offer to purchase $260 million of select Compuware services over the next four years.... more»
2. Cooper v. IBM (Pension Issues)
In July of 2003, IBM and a collection of plaintiffs collectively known as “Cooper” reached a partial settlement concerning pension issues. The remainder of the decision was made in Illinois District court, which decided that several aspects of IBM’s pension plan violated the Employees Retirement Income Security Act by discriminating against older employees. The settlement is originally set at $320 million, however, a pending appeal could increase the settlement by an additional $1.4 billion.... more»
3. Foreign Corrupt Practices Act Violations in Argentina
The U.S. Securities and Exchange Commission (SEC) and IBM settled alleged violations of the Securities Exchange Act of 1934, resulting from presumed illicit payments to Argentine officials by IBM subsidiary IBM-Argentina, S.A. in 1994 and 1995. The SEC found that IBM violated Section 13(b)(2)(A) of the Exchange Act in connection with a $250 million contract to integrate and modernize the computer system of a commercial bank owned by the Argentine government. According to the SEC, certain former senior management of IBM-Argentina, S.A. caused IBM-Argentina to enter into a subcontract with Capacitacion Y Computacion Rural, S.A. (CCR), and money paid to CCR by IBM-Argentina in connection with the subcontract was apparently subsequently paid by CCR to certain bank officials. Specifically, during 1994 and 1995, IBM-Argentina paid CCR approximately $22 million under the subcontract, of which at least $4.5 million was transferred to several bank directors by CCR. IBM-Argentina’s former senior management hid the details of the subcontract, providing IBM-Argentina’s procurement department with fabricated documentation which was incorporated into IBM’s 1994 From 10-K. Without admitting or denying the SEC’s allegations, IBM agreed to pay a $300,000 penalty.... more»
4. South Korea and China Bribery
The U.S. Securities and Exchange Commission (SEC) charged IBM with violating the books and records and internal control provisions of the Foreign Corrupt Practices Act (FCPA) as a result of the provision of improper cash payments, gifts, and travel and entertainment to government officials in South Korea and China. SEC alleged that from 1998 to 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 and provided improper gifts and payments of travel and entertainment expenses to these officials in order to secure the sale of IBM products. SEC also alleged that from at least 2004 to early 2009, employees of IBM (China) Investment Company Limited and IBM Global Services (China) Co., Ltd., both wholly-owned IBM subsidiaries, engaged in a widespread practice of providing overseas trips, entertainment, and improper gifts to Chinese government officials. Without admitting or denying SEC’s allegations, IBM consented to the entry of a final judgment in which it agreed to pay $5,300,000 in disgorgement, $2,700,000 in prejudgment interest, and a $2,000,000 civil penalty.... more»
5. Unlawful Exports (Russia)
“On July 31, a U.S. district judge in Washington D.C. imposed a criminal fine of $8.5 million on IBM East Europe/Asia Ltd. for exporting computers to Arzamas-16, a Russian nuclear weapons laboratory, in violation of the International Emergency Economic Powers Act and the Export Administration Regulations.”... more»
6. European Commission Mainframe Antitrust Investigation
The European Commission ended an antitrust investigation of IBM after the company agreed to modify the way it supplies parts and information to rivals. The Commission had been investigating whether IBM abused its dominant position on the mainframe maintenance market by hindering the access of independent maintenance service providers to critical spare parts. IBM agreed to make spare parts and technical information swiftly available, under commercially reasonable and non-discriminatory terms, to independent mainframe maintainers.... more»
7. SEC v. Galleon Management LP, et al. (Insider Trading)
The Securities and Exchange Commission charged Raj Rajaratnam and his hedge fund advisory firm, Galleon Management LP, with engaging in an insider trading scheme that generated more than $25 million in illicit gains. The SEC alleged that Rajaratnam obtained insider tips and confidential information from friends and business associates about corporate earnings or takeover activity at several companies, which he then used to illegally trade on behalf of Galleon. The SEC also charged six others, including IBM senior vice president Robert Moffat, who allegedly provided inside information about Sun Microsystems. All of the defendants were charged with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In March 2010, Moffat pleaded guilty to two criminal counts in the matter (see related IBM instance, “U.S. v. Moffat (Insider Trading)”). In February 2011, Moffat reached a settlement with the SEC, which permanently barred him from acting as an officer or director of a publicly traded company.... more»
8. U.S. v. Moffat (Insider Trading)
In March 2010, former IBM senior vice president Robert Moffat pleaded guilty to one count of conspiracy to commit securities fraud and one count of securities fraud, admitting that he provided confidential information about two companies in an insider trading scheme that generated more than $25 million in illicit gains. In September 2010, Moffat was sentenced to six months imprisonment and a $50,000 fine. Moffat also faces civil charges filed by the U.S. Securities and Exchange Commission (see related IBM instance, “SEC v. Galleon Management LP, et al. (Insider Trading)”.)... more»
9. Rosenburg v. IBM (Overtime Pay)
IBM settled a class action lawsuit filed in federal district court in California in January 2006 by agreeing to pay $65 million to 32,000 workers who claimed they were wrongly denied overtime pay.... more»
10. Securities Violations (Dollar General)
IBM agreed to pay $7 million as part of a settlement of a Securities and Exchange Commission investigation of Dollar General Corp., a client of IBM’s retail store services unit. IBM neither admitted nor denied wrongdoing in the settlement, but it consented to the entry of an SEC order directing it not to violate certain provisions of the federal securities laws. In 2004, IBM disclosed that regulators might take civil action against it for violating securities laws related to Dollar General accounting transactions dating back to 2000. Around the same time in a related matter, the SEC settled a civil action against IBM employee Kevin B. Collins for aiding and abetting Dollar General's commission of accounting fraud. See IBM Corporation misconduct instance "SEC v. Kevin B. Collins (Securities Violations)."... more»
11. Providing Materially Misleading Financial Statements
The Securities and Exchange Commission concluded an investigation of IBM, finding the company misled analysts about employee stock-option expenses in 2005. The SEC said IBM's conduct violated the reporting provisions of the Securities and Exchange Act of 1934 and ordered IBM to cease and desist from committing or causing violations of these provisions. However, the SEC stopped short of finding fraud had been committed and imposed no fine. See related IBM instance, “IBM Securities Litigation.”... more»
12. SEC v. Kevin B. Collins (Securities Violations)
The Securities and Exchange Commission settled a civil action against IBM employee Kevin B. Collins for aiding and abetting IBM client Dollar General Corp.'s commission of accounting fraud. The SEC alleged Collins assisted Dollar General in a sham transaction that was designed to increase IBM's revenue for fiscal year 2000 and increase Collins' bonus compensation. Collins agreed to pay $95,000, including $48,769 in disgorgement, $21,231 in prejudgment interest and a $25,000 civil penalty. Around the same time in a related matter, the SEC settled an administrative proceeding against IBM involving Dollar General. See IBM Corporation misconduct instance "Securities Violations (Dollar General)."... more»
13. 'Alliance Benefits' Alleged Kickback Scheme
IBM Corp. and PriceWaterhouseCoopers (PWC) separately agreed to pay the U.S. government a total of $5.3 million to settle allegations that the companies solicited and provided improper payments on technology contracts with government agencies. IBM agreed to pay $2.97 million and PWC will pay $2.3 million to settle the complaints, which alleged IBM and PWC requested or made kickback payments, known as "alliance benefits," to other companies with whom they had global alliance relationships and then did not disclose these conflicts of interest. Other prominent tech companies – including Accenture, Hewlett-Packard, and Sun Microsystems – were also alleged to have participated in this arrangement since the late 1990s. See related Accenture pending instance, "False Claims On Hardware, Software & Technology Services Sales" and IBM instance, "'Alliance Benefits' Alleged Kickback Scheme."... more»
14. EPA Suspension
A notice posted on the General Services Administration’s Excluded Parties List System (EPLS) Web site announced that IBM was indefinitely suspended from doing business with the federal government. The information provided on the EPLS Web site did not give a reason for the suspension, only that it was initiated by the Environmental Protection Agency “pursuant to Executive Order 12549 and the agency implementing regulations based on an indictment or other adequate evidence (a) to suspect the commission of an offense that is a cause for debarment or (b) that other causes for debarment under the agency regulations may exist.” However, the next day, the U.S. Attorney’s Office for the Eastern District of Virginia issued subpoenas to various IBM employees to testify before a grand jury concerning allegations that IBM violated the procurement integrity provisions of the Office of Federal Procurement Policy Act while bidding on an EPA contract. About a week after it had been imposed, the government lifted the suspension after IBM agreed to cooperate with the EPA’s and the U.S. Attorney’s ongoing investigations.... more»
15. IBM Securities Litigation
IBM agreed to pay $20 million to settle a shareholders lawsuit that claimed the company misled the public about employee stock-option expenses in 2005. The lawsuit, brought on behalf of shareholders who bought IBM common stock in April 2005, alleged IBM manipulated expectations for its first-quarter earnings announcement in 2005. A year earlier, the Securities and Exchange Commission determined that IBM's conduct had violated federal law, but it did not amount to fraud. See related IBM instance, “Providing Materially Misleading Financial Statements.”... more»
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