Published February 04, 2013
WASHINGTON – A judge on Monday narrowed his request for information from IBM as he decides whether to approve a 2011 settlement between the company and regulators over charges of foreign bribery.
U.S. District Judge Richard Leon, seeking to keep close watch on potential misconduct at the company, has refused to sign off on International Business Machines Corp's settlement with the Securities and Exchange Commission. He scolded IBM for a "history" of violating provisions of the Foreign Corrupt Practices Act and "major payments" to foreign governments.
Leon is the latest federal judge to express unhappiness with U.S. regulators' handling of settlements with corporations during the past two years.
IBM agreed in March 2011 to pay around $10 million to resolve SEC charges over improper gifts to government officials in South Korea and China. IBM neither admitted nor denied the allegations, a common feature in SEC settlements.
Leon has resisted approving the deal and requested IBM to turn over a greater range of information about possible misconduct than both IBM and the SEC had originally agreed to.
On Monday Leon said he was prepared to narrow his request to matters that could prove to be reasonably likely violations of the anti-bribery law, or those that could show the company's books and records to be fraudulent, rather than all potential accounting violations.
Fraudulent records could be a sign of a broader problem at the company, Leon said.
The law bars payments to officials of foreign governments in exchange for business and also requires companies to maintain accurate books.
"It's important, corporate America is watching," Leon said.
In a feisty exchange, Leon told IBM lawyers they were "overthinking" his requests.
Leon told the company and regulators he would not budge on his request for IBM to report any open investigations by federal government agencies into the company. Lawyers for IBM resisted, saying they feared such information could be made public if filed in court.
In the past year numerous federal judges have repeatedly asked whether U.S. regulators were aggressive enough in responding to corporate misconduct.
In November 2011 New York federal judge Jed Rakoff rejected a proposed accord between the SEC and Citigroup and said it was neither fair nor in the public interest.
An appeals court is scheduled to hear arguments on the issue later this week.
(Reporting By Aruna Viswanatha; Editing by Kenneth Barry)