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Harry Cassin
Publisher and Editor

Andy Spalding
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Jessica Tillipman
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Bill Steinman
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Richard L. Cassin
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Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
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Julie DiMauro
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Thomas Fox
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Bill Waite
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Russell A. Stamets
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Finally, a thumbs up for IBM settlement

After a wait of two years, a federal judge Wednesday granted final approval for IBM’s settlement with the SEC of civil FCPA charges.

U.S. District Judge Richard Leon, left, OK’d the $10 million settlement he first rejected in March 2011.

The new settlement terms included enhanced reporting by IBM to the court about its compliance program and any potential FCPA violations.

The SEC’s 2011 civil complaint charged IBM with violating the FCPA’s books and records and internal control provisions. The complaint said IBM made improper cash payments to government officials in South Korea and China. The SEC also described illegal gifts and the improper payment of travel and entertainment expenses.

IBM agreed to the settlement without admitting or denying the allegations.

Under the terms approved Thursday by Judge Leon, IBM is required to file annual reports to the court and the SEC describing its antibribery compliance program.

For the next two years, IBM must also report within 60 days of learning that ‘it is reasonably likely’ the company violated the antibribery or books and records provisions of the FCPA.

The reports to the court can be made under seal.

In a hearing late last year, Judge Leon, who sits on the federal court in the District of Columbia, cited IBM’s history of books and records violations when he rejected the terms the company had negotiated with the SEC.

In April this year, IBM disclosed a broad new DOJ investigation. In an SEC filing, the company said the DOJ was examining transactions in Poland, Argentina, Bangladesh, and Ukraine. ‘The DOJ is also seeking information regarding the company’s global FCPA compliance program and its public sector business,’ IBM said then.

In 2000, IBM paid $300,000 to settle civil FCPA charges. The SEC accused IBM of violating the FCPA’s accounting provisions in connection with alleged illegal payments by a subsidiary in Argentina.

During a 10-minute hearing Thursday, according to Bloomberg, Judge Leon said he’s satisfied IBM ‘has learned its lesson and is moving in the right direction to ensure this never happens again.’

‘If there’s another violation over the next two years, “it won’t be a happy day,” he told company officials in attendance,’ Bloomberg said.


Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.

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