Police in Canada arrested seven people, including officials of IBM and its local partner, along with employees of Quebec’s tax agency for alleged corruption in connection with a $24 million contract.
Fifty officers from the Quebec anti-corruption squad, UPAC, raided homes in and near Montreal and Quebec City Wednesday morning.
They arrested three IBM employees — Patrick Fortin, Gilles Gariépy, and Daniel Letourneau, CBC News said.
Also arrested were Revenue Quebec employees Hamid Iatmanene and Jamal El Khaiat.
Police said the two leaked privileged information to IBM and Quebec company Informatique EBR Inc. about an upcoming public tender for an IT support contract.
IBM and its consortium partner EBR then used the information for the bid, UPAC said.
The other defendants include Mohamed El Khayat and Jean-François Robidas, both directors at EBR when the alleged offenses happened.
The contract involved technology support for a Revenue Quebec data management system.
Jamal El Khaiat of Revenue Quebec and Mohamed El Khayat of EBR are brothers, CBC News said, citing a police source.
Police also arrested a Public Security Ministry employee, Abdelaziz Younsi.
Younsi and El Khayat had been charged earlier for corruption in connection with another contact awarded by the Public Security Ministry, CBC News said.
All seven defendants arrested last week have been charged with fraud, breach of trust, and conspiracy.
In 2011, IBM agreed with the SEC to pay $10 million to resolve FCPA offenses in China and South Korea. A federal judge delayed approving the settlement until 2013 because of IBM’s history of books and records offenses.
The settlement Judge Richard Leon finally approved in July 2013 contained a two-year requirement for IBM to 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 are supposed to go to the court and the SEC.
IBM agreed to the settlement without admitting or denying the allegations.
In IBM’s quarterly SEC filing on April 30, 2013, it disclosed a separate DOJ investigation of possible FCPA violations in Poland, Argentina, Bangladesh, and Ukraine.
The disclosure also said: “The DOJ is also seeking information regarding the company’s global FCPA compliance program and its public sector business.”
In Canada, IBM holds 24 contracts with various government agencies, CBC News said.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.