17 February 2004 The former head of IBM Korea and two other high-ranking IBM officials have been jailed by a court in Seoul after a corruption scandal that has disgraced one of Korea’s most highly regarded foreign firms.
Jang Gyeong-Ho was IBM Korea’s executive director until January when he was dismissed after accusations of bribing government officials. The court found that Jang had helped IBM partner firms LG IBM and Winsol to secure up to 66 billion South Korean won (€44m) of hardware supply contracts to five public agencies, including the tax service.
“IBM Korea has monopolized the local market of large-scale computer servers and this case is a clear example of its monopoly,” the court said in its ruling. “The defendants undermined free market values by planning illegal biddings and offering bribes.”
Jang Gyeong-Ho was jailed for 18 months and fined 98 million won (€66,000). Two of his colleagues at IBM were given one year prison terms, pending an appeal. The president of Winsol, which sells IBM servers, was jailed for a year and two government procurement officials were each sentenced to two and a half years in prison.
IBM has been operating in Korea since 1967 and achieved sales of €900m in 2002. It was voted the most widely admired foreign firm in South Korea in 2003.
When it found itself at the heart of Korea’s biggest corruption scandal involving a foreign company, IBM was quick to distance itself, firing five officials. But this was not enough to deter the US government from launching inquiries into the activities of the systems and services giant.