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IBM and PwC settle kickback charges

Pay $5.3m to keep government happy. Wait a minute, isn't that...?

IBM and accounting firm PricewaterhouseCoopers have agreed to pay a total of about $5.3m to settle allegations that they gave illegal kickbacks to reel in contracts with US government agencies.

IBM has agreed to fork over $2,972,038.50 to make amends, and PwC will pay $2,315,662.

The US Department of Justice said both IBM and PwC separately cooperated in the investigation and won't face further litigation on the matter. The department alleges that IBM and PwC knowingly solicited and made payments to a number of companies with whom they have global alliances.

Both companies have denied the kickback allegations, and said the settlement is not an admission of guilt.

"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," said IBM in a statement. "IBM's business practices and policies comply with all applicable statutes and regulations, including requirements related to government contracts."

The DoJ announced the settlement today as a part of its ongoing investigation of government technology vendors and consulting firms that has already fingered Accenture, Hewlett-Packard and Sun Microsystems.

"The payment of kickbacks or illegal inducements undermines the government procurement process," Peter Keisler, Assistant Attorney General for the Civil Division, said in a statement. "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 charges stem from a complaint filed by Norman Rille and Neal Roberts in 2004 under the whistleblower provisions of the False Claims Act. The statute allows people who file successful actions alleging fraud in the government to receive a share of the money. That could mean some extra spending money for Rille and Roberts. The DoJ said both will receive an amount to be determined in the near future.

The government will give them a fair share, we're sure. Remember, boys, that five bucks will last longer if you buy from the dollar menu. ®

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