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IBM Charged With Bribing Korean, Chinese Officials 263

Posted by timothy
from the conditions-on-the-ground-called-for-it dept.
angry tapir writes "The US Securities and Exchange Commission has charged IBM with giving hundreds of thousands of dollars in bribes to South Korean and Chinese officials starting in the late 1990s, according to court documents. IBM has agreed to pay US$10 million to settle the SEC lawsuit."
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IBM Charged With Bribing Korean, Chinese Officials

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  • by MartinSchou (1360093) on Sunday March 20, 2011 @08:18PM (#35555028)

    "We're sorry we bribed these guys over there. How much do we have to pay you guys to make this problem go away?"

  • by pro151 (2021702) on Sunday March 20, 2011 @08:18PM (#35555030)
    They all do it, IBM just got caught. :-)>
  • by elucido (870205) * on Sunday March 20, 2011 @08:24PM (#35555068)

    Why shouldn't corporations be able to do publicly what they do privately?

  • by phantomfive (622387) on Sunday March 20, 2011 @08:25PM (#35555076) Journal
    Seriously, doesn't it seem like the US SEC just wanted in on the deal? I'm against bribery because living in a culture of bribery is miserable. If China wants to have a system of bribes necessary to get anything done, let them do so. I don't want the SEC to import that culture over here!
  • by Lord_of_the_nerf (895604) on Sunday March 20, 2011 @08:36PM (#35555142)
    What if we called it 'lobbying'?
  • by FudRucker (866063) on Sunday March 20, 2011 @08:42PM (#35555172)
    a fine is just a bribe in reverse...
  • Proportions? (Score:5, Insightful)

    by Haedrian (1676506) on Sunday March 20, 2011 @08:49PM (#35555206)

    Woah, a 10M dollar fine...

    Lets see what Wikipedia says about IBM..

    Net income US$14.833 billion (2010)

    Yeah, that 10M fine will sure show them!

    If they really wanted a punishment, they should give IBM's board community service or something. That'd be an interesting way of doing things. Not denying the CEO's paperboy a large tip this week.

  • by khasim (1285) <brandioch.conner@gmail.com> on Sunday March 20, 2011 @08:51PM (#35555224)

    Once corruption is legitimized, those conditions become the norm.

    Look at all the countries with the lowest standard of living. You'll see that their governments are based upon bribes and favors.

    The money is transfered from public works to private individuals and the entire country suffers.

  • by MickyTheIdiot (1032226) on Sunday March 20, 2011 @08:52PM (#35555228) Homepage Journal

    Well... why not. The Supreme Court already made it legal to bribe officials domestically.

  • by MickyTheIdiot (1032226) on Sunday March 20, 2011 @08:56PM (#35555244) Homepage Journal

    I can't answer for the poster, but I can say YES. I am against what the republicans put forth most of the time because they are bad ideas or puppet proposals for their corporate buddies. The democrats do the exact same thing and when they do I'm opposed to it (**AA anyone?). Allowing open bribery is a bad thing... it isn't doing business and it's just another way for these large concentrations of power to step on other smaller businesses.

  • by tnk1 (899206) on Sunday March 20, 2011 @08:57PM (#35555250)

    Well, that does sound shitty, but bribery is pretty much how business is done in certain places. The US intelligence community took some slack a little while ago by providing information that Airbus was bribing officials to get contracts in foreign countries. The criticism was that this information would benefit US businesses who were, apparently, not bribing anyone. Go figure.

    For every bribery deal that gets caught, there are probably ten or more times that number go right through. Having a law that prevents bribery sounds nice and all, but when no one else seems to care, you start to wonder if there's really a point to it. If bribery is simply the cost of doing business, then so be it. Is it our job to keep civil servants of foreign governments honest? Presumably it is not, since no one really likes having the US show up in their country with their occupations and such.

    Corruption is a corrosive influence on any country, and a lot of them suffer from it. However, the changes that are needed to make that happen probably have to begin from within. I'm not against the law in this case, but I can see why some people in government look around at even our Western countries and wonder if everyone is on the same page.

  • by Anonymous Coward on Sunday March 20, 2011 @09:04PM (#35555286)

    That only works domestically.

  • by rolfwind (528248) on Sunday March 20, 2011 @09:10PM (#35555330)

    If China wants to have a system of bribes necessary to get anything done, let them do so. I don't want the SEC to import that culture over here!

    What, are you fucking ignorant?

    Haven't you seen how Congress is controlled yet? Via campaign contributions. And you don't think that it's filtered down to the state and local level?

    My town only lets tow truck company with town specific permits pick up cars within limits, they even apply this to the highway which technically is federal and should be illegal, and they only let one company have the permits even though there are many others in the area.

  • by gestalt_n_pepper (991155) on Sunday March 20, 2011 @09:22PM (#35555388)

    ...what else can you do other than levy a fine?
    You can throw the top executives who made the decisions in jail with the general prison population. Of course, executive hanging would more effectively reduce recidivism, particularly if done publicly on the nightly news.

  • Re:Maybe ... (Score:4, Insightful)

    by mc6809e (214243) on Sunday March 20, 2011 @09:27PM (#35555432)

    Just maybe, that's the normal way to do business with governments in those parts?

    Just sayin', based on my experience living in Latin America. Most of the time government offices are so sluggish (sometimes deliberately so), that you HAVE to grease the wheels if you want things done before you lose serious revenue. Clearing customs, currency exchange (where the government controls it), assorted permits... most new providers are shocked to learn how much these things can take.

    Yep. And more often than not, a "bribe" is really an extortion payment, especially if you're an American.

    It's not that foreign officials are anti-American, they just know who can afford to pay.

    Next it will be the Chinese that get forced to pay these "bribes".

  • by Solandri (704621) on Sunday March 20, 2011 @09:51PM (#35555576)

    Once corruption is legitimized, those conditions become the norm.

    You're somehow inferring that bribery by foreign corporations is what's causing the corruption and leading to it becoming the norm. That's (usually) not true. In most of these countries, bribery and graft were already the norm before the foreign business even got there. In that situation, a country has two ideological choices:

    A) Isoluation and refusal to do business. You basically tell the country to screw off and prohibit any of your corporations from doing any business in that country. That you won't do business with it until it cleans up its act first. Then you sit and wait, and hope the people of the country will on their own spontaneously revolt, clean up government and business, and establish a system more compatible with your moral ideology. This is the approach the U.S. is taking with Cuba.

    B) Acceptance of the different standards. You recognize that things are done differently there than here, and continue to conduct business playing by their rules. You do this with the long-term hope that the extra economic velocity generated by your business will lead to a thriving middle class, which will gain enough economic and socio-political clout that they're able to bend their own government into cleaning up its act. A peasant state where 95% of the wealth is controlled by 1% of the population doesn't need to listen to what 99% of its population says. But a middle class of 50% of the population controling 40% of the wealth is a force to be reckoned with. This is the approach the U.S. is taking with China.

    I won't argue which method is better. I'm not even sure myself. I will say this though: Uncompromising ideology makes a good goal towards which you want to steer society. But it frequently makes for a lousy method with which to steer society. If you say corruption is bad so you should never do anything which encourage it, you just end up going out of business and your opinion doesn't matter anymore. It's better to compromise, allow a little corruption, gain more power and influence, then use that power to try to steer things for the better.

  • Wait, wait .... (Score:3, Insightful)

    by future assassin (639396) on Sunday March 20, 2011 @09:58PM (#35555622) Homepage

    Bringing down Wall St and getting rewarded with a bail out is ok but bribing foreigners with a few thousands here and there is full on illegal? Only in Bizzaro land called the US of A.

  • by CodeBuster (516420) on Sunday March 20, 2011 @10:28PM (#35555808)
    You're familiar with the expression, "Don't bite the hand that feeds you"? It applies here too. Most of us here on Slashdot have jobs and can feed our families because international business exists and chooses to operate here in the United States. We cannot afford to be unfriendly to businesses that we desperately need to stay here and create jobs. So they bribed some Korean officials? Who gives a flying f**ck, that's how they do business outside the United States. If that helps to keep my job here in the United States then frankly, I couldn't care less what goes on in Korea. Like many government agencies set up to protect the "little guy", the SEC has done more to prevent the best investment opportunities from reaching the middle class over the last seventy seven odd years than just about anyone else. The rich are able to make real investments while the rest of us are basically stuck handing our profits over to mutual fund managers in our 401k's because that is what keeps us "safe" from having losses (and gains) and safe from ever having a real retirement. The only real hope for the little guy is to somehow amass enough wealth to become a High Net Worth Individual [wikipedia.org] at which point the real investment opportunities become available.
  • by Anonymous Coward on Sunday March 20, 2011 @10:48PM (#35555890)

          There is a fine line between bribery and being extorted.

  • by MasaMuneCyrus (779918) on Sunday March 20, 2011 @10:54PM (#35555924)

    Chinese do what they like in China, but imprisoning foreigners, especially executives, looks bad and is bad for business. It's hard to convince foreigners to invest in your country if you lock them when the set foot on your soil after all.

    One of the things China likes is bribes. Bribes aren't a way to get ahead in business over there, they are the way to do business. Maybe it's changing, maybe its not -- depending on who you ask -- but I'd guess that Intel not only bribed officials a ton, but they were probably expected to bribe a ton, and it probably wasn't looked down upon as long as the culturally-proper chain of bribes was maintained.

    I'm not sure about South Korea nowadays, but they also certainly have a history of bribery as a way to do business, and I bet that it was were pretty damn common in the early 90's.

  • by mjwx (966435) on Monday March 21, 2011 @12:47AM (#35556412)
    He wasn't hung for bribery,

    He was shot for getting caught.
  • by syousef (465911) on Monday March 21, 2011 @12:58AM (#35556460) Journal

    So they bribed some Korean officials? Who gives a flying f**ck, that's how they do business outside the United States.

    So they bribed some US officials to let migrant workers do the job at half the price and fired all their staff? So what!? It's an at will state. Those greedy rich Americans can apply at subsistance wages like I did.

    See, it cuts both ways. You allow bribery to thrive to suit a corporation, and they'll turn on you. If you allow bribery justice is never carried out and people suffer - anything from death and injury to virtual slavery. I'm alright screw everyone else is a destructive unenlightened attitude.

  • by NeutronCowboy (896098) on Monday March 21, 2011 @01:02AM (#35556480)

    Bribes are an artificial barrier to entry into a market. As a result, they are by definition a drag on the efficiency of a market. Furthermore, because of how bribes work, barriers to entry can be made arbitrarily high, resulting in the richest players in a market being able to extract monopoly rents without having to compete for customers.

    You want me to go over basic free market theory again? I can't believe there's even a question why bribes are a bad idea. Next, someone will ask whether ice is cold, and whether water should be wet.

  • by thoughtsatthemoment (1687848) on Monday March 21, 2011 @01:18AM (#35556548) Journal
    Not quite accurate. It's not that hard to find a corrupted official at any level in China. He was shot because he lost his political "umbrella".
  • by Anonymous Coward on Monday March 21, 2011 @02:47AM (#35556898)

    There is no legal or ethical reason the SEC cannot have laws that penalize this kind of bribery with jail time by the people in the corporation who did the illegal acts. There is also no legal or ethical reason the SEC cannot require the kind of auditable bookkeeping that would make "looking the other way" a crime actively committed, rather than merely an obligation passively neglected.

    The only reason we do not have those laws and enforce them...

    WTF are you talking about, Doc? We do have "those laws", and this article is about them being enforced.

    It's called the Foreign Corrupt Practices Act.
    http://www.justice.gov/criminal/fraud/fcpa/

    And it's got plenty of penalties for individuals. Hell, even shareholders are liable. This law is serious business. Read the DoJ's lay person's guide:
    http://www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf

    The following criminal penalties may be imposed for violations of the FCPA's anti-bribery
    provisions: corporations and other business entities are subject to a fine of up to $2,000,000;
    officers, directors, stockholders, employees, and agents are subject to a fine of up to
    $100,000 and imprisonment for up to five years. Moreover, under the Alternative Fines Act,
    these fines may be actually quite higher -- the actual fine may be up to twice the benefit that
    the defendant sought to obtain by making the corrupt payment. You should also be aware that
    fines imposed on individuals may not be paid by their employer or principal.

    I'd bold sections of that but it's all good.

    They can also go after you in a civil suit, where the burden of proof is lower:

    The Attorney General or the SEC, as appropriate, may bring a civil action for a fine of up to
    $10,000 against any firm as well as any officer, director, employee, or agent of a firm, or
    stockholder acting on behalf of the firm, who violates the anti-bribery provisions. In addition,
    in an SEC enforcement action, the court may impose an additional fine ...

    That's what they did in this case (hence no prison terms) according to TFA, and as you can see those "additional fines" can be rather high.

    Speaking of burden of proof, payments are assumed to be unlawful until proven otherwise:

    ...because these defenses are "affirmative defenses," the defendant is required to
    show in the first instance that the payment met these requirements. The prosecution does not
    bear the burden of demonstrating in the first instance that the payments did not constitute
    this type of payment.

    Not quite "guilty until proven innocent", but getting there.

    Seriously, read the DoJ's website. It addresses every point you brought up. It includes a chronological list of criminal cases (you will recognize some company names):
    http://www.justice.gov/criminal/fraud/fcpa/cases/2010.html

    Lots of people plead guilty when facing jail time, it seems. I'll leave it to you to go through the judgments and see how often prison, rather than probation, are handed down.

    [FWIW, I'm not in any way associated with the DoJ. I simply got some FPCA training at work, and I know how to use a search engine.]

  • by thoughtsatthemoment (1687848) on Monday March 21, 2011 @02:58AM (#35556934) Journal

    It is probably close to impossible to find someone not corrupt in China.

    Isn't that too strong for a billion people. Actually I grew up in China but somehow in my childhood I had problems accepting gifts, as for some reason I didn't want other people's stuff. You might say there is a prevailing culture, but a billion people can develop a lot of varieties.

  • by DNS-and-BIND (461968) on Monday March 21, 2011 @03:07AM (#35556966) Homepage
    Wrong, wrong, wrong. Where do you get your news about China, the New York Times? China doesn't "like" bribes more than anywhere else. You can get things done by the rule of law.

    "One of the things I have always found troubling about Westerners doing business in emerging market countries is that they sometimes take an almost perverse pride in discussing payoffs to government officials. It is as though their having paid a bribe is a symbol of their international sophistication and insider knowledge. Yet, countless times when I am told of the bribe, I know the very same thing could almost certainly have been accomplished without a bribe."
    --Dan Harris, chinalawblog.com [chinalawblog.com]

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