SEC v. Int’l Business Machines Corp. (D.D.C. 2000)

• Case Name
• SEC v. Int’l Business Machines Corp. (D.D.C. 2000)

• Date Filed
• 12/21/2000

• Enforcement Agency
• SEC

• Countries
• Argentina

• Foreign Official
• Several directors of Banco de La Nation Argentina.

• Date of Conduct
• 1994 to 1995

• Nature of Business
• International Business Machines Corporation (“IBM”) is a U.S. corporation.  Its indirectly wholly-owned subsidiary, IBM-Argentina, entered into a systems integration contract with Banco de La Nación Argentina, a government-owned commercial bank.  IBM’s common stock is registered with the SEC pursuant to Section 12(b) of the Exchange Act and is listed on the NYSE.

• Influence to be Obtained
• According to the SEC, in 1994, the Banco de la Nacion Argentina awarded a systems modernization and integration contract to IBM-Argentina worth approximately $250 million.  IBM-Argentina entered into a subcontract with Capacitacion y Computacion Rural, S.A. (“CCR”), an Argentine company, in which IBM-Argentina agreed to pay CCR $37 million for services including provision of an alternative banking software system for BNA.
  
  The SEC alleges that senior management at IBM-Argentina overrode IBM’s procurement and contracting procedures by providing the Procurement department with false and misleading documentation pertaining to the contract with CCR.  IBM-Argentina paid approximately $22 million to CCR, and then CCR transferred at least $4.5 million of those payments directly to BNA directors. 

• Enforcement
• The SEC alleged violation by IBM of the FCPA accounting provisions because IBM consolidated its subsidiaries’ financial results in its SEC reports.  The SEC did not allege that IBM itself had inadequate accounting controls or that people at IBM knew of or authorized the payments or made false entries in IBM’s books or records.  IBM consented to a cease‑and‑desist order as to the violation of the books-and-records provision of the FCPA and paid a civil fine of $300,000.  There are related proceedings in Argentina and Switzerland to recover the $4.5 million payment.

• Amount of the Value
• Approximately $4.5 million.

• Amount of Business Related to Payment
• $250 million.

• Intermediary
• Local Subcontractor.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 300,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 300,000

Int’l Business Machines Corp. (IBM)

• Citation
• SEC v. IBM Corp., No. 00 cv 3040 (D.D.C. 2000).

• Date Filed
• 12/21/2000

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records

• Other Statutory Provision
• None

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States