In Reply to: Re: IBM's BCG can land you in jail! posted by Update on 04 January 2004 at 21:38:57:
Self imposed exile from Argentina trumped a Government ban. Will the same happen in S. Korea.
Korea to penalise IBM unit for collusion
By Song Jung-a in Seoul
FT.com site; Jan 05, 2004
South Korea was expected to ban IBM from bidding for any state procurement contracts after prosecutors found the technology giant's Korean subsidiary won government orders through collusion and bribery.
Prosecutors on Sunday indicted 48 government and corporate executives on corruption charges after an investigation revealed executives at IBM Korea had bribed government officials to win $55m worth of contracts from government agencies such as the information ministry and the national tax office.
The corruption case, the biggest involving a foreign company in Korea, shocked the nation, demonstrating that shady business practices continue despite President Roh Moo-hyun's pledge to crack down on illegal transactions.
"Once the collusion charges are proven, state agencies will exclude the involved companies from participating in any state auction for computer purchases," said an official at the Fair Trade Commission, the country's anti-trust watchdog. The ban would prevent IBM from bidding for procurement contracts for servers and personal computers.
The information ministry apologised to the public for the scandal and said it would strengthen monitoring and auditing within the ministry to guard against further cases. Prosecutors accused government officials for receiving bribes in return for turning a blind eye to the prearranged bids, as well as providing information on competing bids.
"All corruption in procurement businesses must be eradicated. Those who seek corrupt gains by receiving bribes must be sternly punished," said a ministry spokesman.
After the scandal broke out, IBM Korea fired Jang Kyung-ho, a former executive director, who was accused of helping Winsol, a local distributor of IBM servers, win Won43bn worth of contracts from state agencies through rigged bids between 2001 and 2003.
IBM issued a statement, saying that the action of some employees involved in the case violated the company's business practices. "We feel regret about some individuals' violations of the company's regulations," said the statement. "Such activity was neither approved nor condoned by IBM Korea."
IBM began operating in South Korea in 1967, making it one of the oldest foreign companies in the country and its biggest server provider with a market share of 39.4 percent. IBM Korea reported sales of Won10,000bn last year in Korea.
The investigation, which began in last November, also found that executives at LG IBM, a joint venture between IBM and LG Electronics, and SK C&C, an unlisted system network firm in the SK Group, were also involved in the collusive activities.