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IBM and LG endure post South Korea scandal breakup

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IBM and LG Electronics are going their separate ways in South Korea, dissolving an eight-year pact around PC manufacturing and sales.

LG IBM PC Ltd. had operated as a joint venture of the two firms with IBM holding 51 percent of the company and LG picking up the other 49 percent. By the end of this year, both firms plan to operate on their own and have competing PC lines. The LG IBM alliance was damaged by scandal early this year, when Korean investigators charged the firm with contributing to an IBM Korea bribery operation. Three IBM Korea workers and three LG IBM workers were fired as a result of the case, which saw executives use handouts such as exclusive golf club memberships to secure server and PC sales.

IBM denied that the scandal had anything to do with the end of he join venture.

IBM originally tapped LG Electronics to help it gain entry into the South Korean PC market. LG, an electronics makers, benefitted by learning the ins and outs of the PC business from IBM.

IBM Korea will continue to ship its ThinkPad laptops and LG will move its Xnote laptop line. ®

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