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IBM Corporation

'Alliance Benefits' Alleged Kickback Scheme

Date: 08/16/2007 (Date of Announcement)

Misconduct Type: Government Contract Fraud

Enforcement Agency: Multiple Agencies

Contracting Party: Multiple Agencies

Court Type: Civil

Amount: $2,972,038

Disposition: Settlement

Synopsis: 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."