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

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

“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 “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.

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