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Big Blue union calls for probe of all IBM execs

Insider trading arrest reaction

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Union organizers are rallying around the recent arrest of IBM executive Robert Moffat on insider trading charges to call for a broader investigation into all the company's heads.

Alliance@IBM, a union that represents a small number of IBM employees, posted an open letter on its website Tuesday asking the US Department of Justice and US Securities and Exchange Commission to launch a probe of all IBM executives. On behalf of current and former employees at Big Blue, the organization is an extremely vocal critic of IBM outsourcing and its downsizing of domestic operations.

"There's been an awful lot of rumor and innuendo over the years from employees who are very concerned that they see IBM taking a turn towards what they believe is unethical behavior and possibly illegal behavior," alliance@IBM national coordinator Lee Conrad told El Reg. "While this can't be proved at this point, there's an underlying feeling that this arrest of Moffat might just be the tip of the iceberg."

Moffat is senior vice president and general manager of IBM's Systems and Technology Group, and before his arrest, he was seen as an heir apparent to CEO Sam Palmisano. He, along with five others, were charged October 16 over an alleged insider trading scheme that investigators said netted $20m in illegal gains.

Moffat is accused of passing information to a portfolio manager at hedge fund New Castle Funds regarding IBM revenues and profits ahead of when the numbers went public in late 2008 and early 2009. IBM has placed the executive on leave following the charges. Moffat's attorney says his client is innocent.

In an open letter posted on its website, Alliance@IBM questions whether Moffat's alleged actions involve more than just one executive at IBM – particularly in light of Moffat being groomed to become the company's next chief executive. Conrad tells us Alliance@IBM has faxed its call to investigate to the SEC and sent it via email to the DoJ. It also plans to distribute the letter to select politicians that oversee large IBM communities, such as in New York and California.

According to Conrad, many IBM employees herald the hiring of former CEO Louis Gerstner in 1993 as the beginning of IBM's loss of respect for its workers.

"What employees feel and what the Alliance feels is that the current crop of IBM executive have pretty much broken faith with the employees and the communities that IBM does business in," he said.

The Alliance@IBM website posted a poll October 19 asking whether readers believe all IBM executives should be investigated for unethical or illegal activities in light of Moffat's arrest. The results, as of publication, are 476 voting yes; 182 voting no; and 1 vote for "not sure." This, of course, is an internet poll on a union website – so the results are almost definitely skewed.

IBM representatives did not immediately respond to our request for comment on this particular matter. ®

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