LIMITED OFFER
Subscribe
to Brainstorm Magazine for R199.95 today
and get 11 issues
PLUS
a
FREE
APC Biometric Password Manager (valued at over R450.00) absolutely FREE.
Click here.
[Seoul/New York | Reuters, 6 January 2004] -
Some 48 South Korean government officials and corporate executives, mainly from IBM ventures, have been charged with bribery in a case involving state contracts for computer parts and servers, prosecutors said yesterday.Fourteen government officials were bribed a total of 290 million won ($240 000) and an IBM Korea executive received golf memberships worth 98 million won from a subcontractor, prosecutors said.IBM Korea, a unit of Armonk, New York-based IBM, said it did not condone the activities and that it had fired some staff involved in the case.The US government is aggressively pursuing companies that infringe on the Foreign Corrupt Practices Act and will at least look at the case, according to Martin J Weinstein, a partner at Willkie Farr & Gallagher in Washington."The US government reads the newspaper like everybody else. So they will look at it," Weinstein said.But based on the available information about the size of the case, Weinstein said he does not think it is likely to turn out to be a big corporate case.IBM, which established IBM Korea in 1967, was accused in the mid-1990s of paying $21 million in bribes to an Argentina state-owned bank.IBM spokesman John Bukovinsky said three employees were involved and have been fired. IBM has extensive guidelines on business conduct that employees must follow, he said."We have a set of business conduct guidelines that every employee is required to be re-certified in every year," Bukovinsky said. The guidelines include rules about how to deal with customers and business partners, he said.Korea clamps down on corruptionKorean president Roh Moo-hyun has pledged to clamp down on corruption and questionable business practices, with prosecutors spearheading a series of probes to end collusion between politicians, bureaucrats and businessmen.The charges announced yesterday follow an investigation into allegations that executives of IBM's wholly owned IBM Korea and LGIBMPC -- a joint venture 51% owned by IBM and 49% owned by LG Electronics -- had bribed government officials to get deals.The Seoul District Prosecutor's Office said in a faxed statement that IBM Korea had won orders for servers and PC parts worth 51 billion won ($42.7 million) and LGIBMPC had won orders worth 870 million won through illegal actions."IBM Korea and LGIBMPC Corp had bribed computer-related department officials at state-run corporations and colluded with them in auctions to supply servers and PC parts," the prosecutor's office said in the statement.The prosecutor's office said that in return for bribes, National Tax Office and the information ministry officials gave these companies' technology high marks when they bid for government contracts.Fourteen government officials provided auction information in advance, including a 49-year-old tax official, who is alleged to have received 80 million won in bribes from IBM Korea, prosecutors said.The prosecutors office said the bulk of the 290 million won in total bribes was in cash with 25 million won paid in shares in a firm due to go public soon.The office said Chang Kyoung-ho, head of IBM Korea's public sector team, masterminded the scheme.Chang was arrested for taking bribes from a subcontractor after prosecutors said he received 98 million won in golf membership fees and 30 million won in shares from the subcontractor in return for helping it to win a state contract.IBM Korea formed slush funds by omitting part of its profits or expensing services to subcontractors to lobby government officials, prosecutors said.Executives at LG Electronics and SK C&C, an unlisted system network firm in the SK Group, and other subsidiaries of South Korean conglomerates were also involved in collusion, it added.The government would prevent these companies from participating in any state auction for servers and PC purchases for two years, the office said.In Seoul trading, the main index ended at a 19-month closing high yesterday, while shares in LG Electronics fell 0.2% to 58 500 won. On the New York Stock Exchange, IBM shares gained $1.38, or 1.5%, to trade at $92.93.The company leads South Korea's server market with a share of 39.4%, while LGIBMPC ranks fourth in Korea's PC and notebook market with a 10% share. IBM Korea had 1.37 trillion won in sales in 2002.(US$1=1 195.0 won)
Copyright 2004 Reuters Limited. All rights reserved. Republication and redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
ITWeb’s
annual BI conference is the meeting place for anyone in BI. Hear
from international decision management expert James Taylor,
plus 8 case studies, including FNB, Standard Bank, Shoprite and SARS.
Don't
miss out on THE annual meeting place for all those involved in the BI
space.
Secure your
place
today!
Diamond sponsor
Platinum sponsor
Copyright (c) 1996 - 2010 ITWeb Limited.
All rights reserved.
Would you like to see your news here?
Contact us for more details at itnews@itweb.co.za
