IBM and PwC settle kickbacks case

16 August 2007
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17 August 2007 | Paul Snell

IBM and PricewaterhouseCoopers (PwC) have agreed to pay the US government more than $5.2 million (£2.7 million) to settle allegations over improper payments.

Complaints made to the US Department of Justice (DoJ) alleged the firms had solicited or made payments to companies with whom they had a relationship.

The DoJ said these payments, relating to government technology contracts, amount to kickbacks, and that the relationships represent a conflict of interest in violation of the contracts. The DoJ did not reveal the names or business of the other companies involved.

Peter Keisler, assistant attorney general for the civil division at the DoJ, said in a statement: "The payment of kickbacks or illegal inducements undermines the government procurement process. The justice department is acting to protect the integrity of the procurement process for technology products and services."

Under the terms of the settlement, IBM will pay the government $2.9 million (£1.5 million) and PwC will pay $2.3 million (£1.2 million). The actions against the companies form part of a larger justice department investigation involving technology suppliers and consultants.

Both firms deny any wrongdoing. IBM said in a statement: "IBM did not engage in kickbacks, false claims, or any other illegal conduct alleged in the various complaints that have been filed in this matter. IBM's business practices and policies comply with all applicable statutes and regulations, including requirements related to government contracts."

PwC said: "PwC has agreed to settle a case with the DoJ concerning work performed by its former consulting business, since sold in October 2002. PwC believes the allegations of the complaint characterising conduct as 'kickbacks' are completely without merit."

It added it had settled the complaints without any admission of wrongdoing, to avoid the "expense, distraction and uncertainty of liquidation".


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