A US federal judge has refused to agree to a settlement between the SEC and IBM over charges dating back to 2011 alleging that Big Blue bribed Chinese and South Korean officials unless the company produces a whole new set of extensive compliance reports.
Judge Richard Leon, who has been reviewing the settlement case for the past 22 months, took the unusual step last week of publicly criticising the SEC – as well as IBM – for opposing his request for more data.
IBM said back in 2011 that it had reached an agreement with the SEC to pay $10m to settle alleged violations of the Foreign Corrupt Practices Act (FCPA).
The computing giant is alleged to have bribed South Korean officials - over a period from 1998 to 2003 - with a total of $207,000. According to the SEC's complaint (PDF), the money was allegedly handed in shopping bags stuffed with cash as well as in the form of travel and entertainment-based gifts - supposedly in order to win contracts worth $54m.
In China, meanwhile, IBM is alleged to have created slush funds at travel agencies and other business partners to bribe government officials with free trips abroad and other gifts.
However, Judge Leon isn’t happy with the settlement and said it is in the public interest to dig a little deeper, according to Bloomberg. He now wants reports not merely connected to the original bribery complaint but citing all potential accounting violations relating to the FCPA.
“I’m not just going to roll over like the SEC has,” Leon is said to have told IBM’s lawyer, Peter Barbur, during the 25-minute public hearing.
“You’re going to need data to satisfy me.”
Barbur is claiming the additional reporting requirements are too burdensome and would be impossible to satisfy – a line the SEC apparently agrees with.
The next hearing, set for 4 February, will see IBM forced to prove that the additional data requested is indeed impossible for one of the world’s largest technology companies to track. ®