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SEC v. International Business Machines Corporation

 
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International Business Machines Corporation
:
SEC Civil
:
December 21, 2000
:
SEC v. International Business Machines Corporation
:
SEC v. International Business Machines Corporation 00-Civ-3040 D.D.C. Dec. 21, 2000
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This case represents the first matter in which the SEC brought bribery related books and records charges against an issuer based upon the acts of a non-U.S. subsidiary of which the parent is alleged to have had no knowledge.
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Computer & Information Technologies-Hardware
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Argentina
:
1994
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Directors of Banco de La Nacion Argentina.
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International Business Machines Corporation ("IBM") settled this action with the SEC without admitting or denying the following facts alleged in the SEC's complaint.

IBM-Argentina, an indirectly wholly-owned subsidiary of IBM, entered into a subcontract with Capacitacion Y Computacion Rural ("CCR") in connection with a systems integration contract between IBM-Argentina and Banco de la Nacion Argentina ("BNA"). During 1994 and 1995, IBM-Argentina paid CCR approximately $22 million under the subcontract, of which at least $4.5 million was transferred to several BNA directors by CCR. These transactions took place without the knowledge or approval of any IBM employee in the United States. IBM-Argentina's former senior management also overrode IBM procurement and contracting procedures by providing the Procurement department with fabricated documentation.

After IBM officials learned about IBM-Argentina's cover up, the company took immediate corrective action. Members of IBM-Argentina's senior management were either terminated or asked to resign and all future payments to CCR were stopped. IBM also enhanced its internal controls with respect to FCPA compliance issues.

Argentina conducted an active investigation in this matter, during which it collected documents and requested assistance from the United States and Switzerland, including freezing Swiss bank accounts.
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Books and records (Issuer)
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Fine, Injunction/Cease and desist
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IBM consented to a cease-and-desist order as to the books and records provision and paid a civil fine of $300,000.
:
300,000
:
0
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Issuer
:
U.S.
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Contract Procurement/Retention
:
250,000,000
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Wire/check
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Direct
:
4,500,000
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Argentina
:
Argentina
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No
:
No
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Argentina, Switzerland