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IBM, PWC Settle Kickback Charges

IBM and PriceWaterhouseCoopers (PWC) agreed today to pay $5.9 million to settle allegations that the companies made illegal kickbacks to obtain government technology contracts. IBM will pay $2.9 million while PWC will pay $2.3 million.

Both companies cooperated in the Department of Justice (DoJ) investigation and face no further litigation in the matter.

The settlements are part of an ongoing DoJ investigation of government technology vendors and consultants that has already resulted in complaints being filed against Accenture, Hewlett-Packard and Sun Microsystems.

According to the DoJ, IBM and PWC knowingly solicited and/or made payments of money and other things of value to a number of companies with whom they had global alliance relationships. The DoJ said the benefits amounted to kickbacks in violation of federal acquisition regulations.

"The payment of kickbacks or illegal inducements undermines the government procurement process," Assistant Attorney General Peter D. Keisler said in a statement. "The Justice Department is acting in these cases and in the overall investigation to protect the integrity of the procurement process for technology products and services."

The complaints against IBM and PCW were originally filed under the whistleblower provisions of the False Claims Act. The statute allows persons who file successful actions alleging fraud against the government to receive a share of any resulting recovery.

Norman J. Rille and Neal A. Roberts, who filed the complaint, will receive an amount to be determined in the future.

Despite the settlement, IBM maintains it did nothing wrong.

"IBM did not engage in kickbacks, false claims or any other illegal conduct alleged in the various complaints that have been filed in this matter," IBM spokesman Fred McNeese told Internetnews.com. "IBM's business practices and policies comply with all applicable statutes and regulations, including any requirements related to government contracts."

IBM declined to discuss further details of the settlement.