Auditing

PwC Settles $2.3M Kickback Charge

The Department of Justice claims the auditor and IBM were involved in improper deals for government contracts.
Sarah JohnsonAugust 16, 2007

PricewaterhouseCoopers has agreed to pay $2.3 million to settle Department of Justice charges that the firm contributed to “improper” deals made on technology contracts with government agencies.

The Justice Department alleged that PwC and IBM — which has also settled similar charges for $2.97 million — either solicited or made payments using money or other so-called “alliance benefits” to a number of companies with which they had relationships. The government claims the actions amounted to kickbacks and conflict-of-interest relationships that should have been disclosed under federal acquisition regulations.

For its part, PwC believes the DOJ complaint’s use of the word “kickbacks” is meritless, says David Nestor, a PwC spokesman. However, the firm decided to settle “without any admission of wrongdoing, in order to avoid the expense, distraction, and uncertainty of litigation,” he told CFO.com. The complaint, filed in 2004 under the whistleblower provisions of the False Claims Act, were directed at PwC’s former consulting business, which the firm sold in 2002, he added.

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IBM also defended itself. “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,” spokesman Fred McNeese told CFO.com. “IBM’s business practices and policies comply with all applicable statutes and regulations, including requirements related to government contracts.”

The DOJ says the recent settlements arose out of its ongoing investigation of government technology vendors and consultants. In April, the agency filed complaints in Arkansas against Accenture, Hewlett-Packard, and Sun Microsystems.