IBM Korea dismisses executive indicted in bribery probe

IBM Corp.’s Korean subsidiary has dismissed several employees including an executive following their indictment by public prosecutors investigating the use of bribery to secure government contracts, the company said Monday.

Chang Kyung Ho, the executive in charge of IBM Korea Inc.’s public sector business, Lee Jeong Woo, public sector territory manager, and Yong Ki, public sector cluster manager, were dismissed for violating IBM’s code of conduct and business behaviour, said Craig Lowder, IBM’s vice-president of communications for Asia-Pacific.

Indictment of the three, which prompted the sackings, came after a two-month investigation by the Seoul District Prosecutor’s Office into IBM and two affiliates: its LGIBM PC Ltd. joint venture and Winsol Co. Ltd.

The investigation, which also resulted in the indictment of several dozen other people at several companies, focused on a number of public sector computer contracts put out for tender between 2001 and 2003, according to Korean media reports.

Prosecutors allege the company created a slush fund from which to pay officials in order to receive contracts from government agencies, according to reports in several Korean newspapers. The size of the slush fund was 3 billion won (US$2.5 million) and the total value of contracts received was 66 billion won, reported the Chosun Ilbo.

Government agencies involved include the National Tax Office, Supreme Prosecutor’s Office, Ministry of Information and Communication, the Army, the Navy, Korea Electric Power Corp., Korean Broadcasting System, Korea Telecom Corp. and the Association of the Korean Federation of Community Credit Cooperatives, said the Chosun Ilbo and Dong Ang Ilbo newspapers.

“The allegations contained in the indictments raise serious concerns for IBM Korea,” the company said in a statement. “We regret the actions by several individuals named in the indictments, who violated IBM’s strict code of business conduct and highest business standards. Their actions were neither approved or condoned by IBM Korea. IBM has taken action against them including termination of employment.”

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