IBM & PwC to pay more than $5.2 million to settle kickback complaints

IBM Corporation and PricewaterhouseCoopers have together agreed to pay the United States more than $5.2 million to settle allegations that the companies solicited and provided improper payments and other things of value on technology contracts with government agencies, the Justice Department announced last week. IBM has agreed to pay $2,972,038.50, while PWC will pay $2,316,662.

According to the complaints against the companies, IBM and PWC knowingly solicited and/or made payments of money and other things of value, known as alliance benefits, to a number of companies with whom they had global alliance relationships. The government intervened in the actions because the alleged alliance relationships and resulting alliance benefits amount to kickbacks, as well as undisclosed conflict of interest relationships in violation of contractual provisions and the applicable provisions of the federal acquisition regulations.

Both companies have denied the kickback allegations, and said the settlement is not an admission of guilt. Both companies cooperated in the Department of Justice investigation and face no further litigation in the matter.

"The payment of kickbacks or illegal inducements undermines the government procurement process," said Peter D. Keisler, Assistant Attorney General for the Civil Division. "The Justice Department is acting in these cases and in the overall investigation to protect the integrity of the procurement process for technology products and services."

The actions against IBM and PWC are part of a larger ongoing investigation of government technology vendors and consultants that has already resulted in complaints being filed in April 2007 in Arkansas against Accenture, Hewlett-Packard, and Sun Microsystems. IBM and PWC separately cooperated in the investigation and were able to resolve the issues relating to their alliance activities without further litigation.

The complaints were originally filed in September 2004 under the qui tam or whistleblower provisions of the False Claims Act by Norman J. Rille and Neal A. Roberts. The qui tam statute ("He who sues on behalf of the king as well as for himself") allows persons who file successful actions alleging fraud against the government to receive a share of any resulting recovery. Rille and Roberts will receive an amount to be determined in the near future.

The settlement resulted from an investigation by the Justice Department's Civil Division; the U.S. Attorney's Office in Little Rock, Ark.; the Department of Energy's Office of Inspector General; the Defense Criminal Investigative Service; the General Services Administration Office of the Inspector General; NASA Office of the Inspector General; the Army Criminal Investigation Command; the Defense Contract Audit Agency; the Environmental Protection Agency Office of the Inspector General; the Postal Service Office of the Inspector General; the Navy Criminal Investigative Service; and the Air Force Office of Special Investigations.

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