IBM and the Fine Art of Bribery

by Alexander Cockburn

We'll get into the fragrant details of the IBM affair shortly, but one remarkably constant feature in stories about corrupt money finding its way into secret bank accounts in Geneva is how seldom U.S. banks seem -- at least in the U.S. press -- to be substantively involved.

Indeed, it's something of a miracle that with the annual total value of the U.S. cocaine trade estimated by the White House in 1995 to be $38 billion, and with the United States share being about 70 percent of global demand, there has never been any resolute effort by the United States press to ratify the obvious: Major U.S. banks have been up to their armpits in the drug trade for many years.

The CIA, eager to justify its miserable existence by expanding into commercial espionage, buttressed this bribe- to- survive position by leaking estimates three years ago that bribery landed foreign companies $36 billion worth of business in 1994 at the expense of U.S. companies. Marring this rationale was the fact that in South Korea, General Dynamics was accused of handing out bribes to win a contract at the expense of McDonnell Douglas, and in Argentina, all of IBM's competitors for a contract with Banco Nacion (the national bank) were American.

Back in 1993, Banco Nacion decided to computerize its entire operation. The bid specs were picked up by IBM and two rivals. But then, all of a sudden, Banco Nacion withdrew the specs and rewrote them in such a fashion that only IBM could satisfy the new criteria. In July of 1994, IBM won the contract, bidding a little more than $249 million. Six months later, an Argentine audit showed that $37 million of IBM's money had gone to pay a small Argentine company for "services."

Why would IBM put out such a wad of money to get a $249 million contract? If IBM got the monopoly on hardware, software and services for Argentina's bank, its executives could reasonably assume that other banks might get the same equipment and services and so too might Argentina's Internal Revenue Service. In other words, $37 million might buy IBM the prize of furnishing the computerized data systems for all government and private banking functions.

For almost three years, an Argentine federal judge, Adolfo Bagnasco, tried to get Swiss banking officials to disclose how much money is hidden in numbered accounts containing IBM's alleged cash bribe to officials of Banco Nacion. The Swiss stonewalled and riposted by asking nasty questions about "disappeared" persons in Argentina. But on March 28, Bagnasco was told by Carla del Ponte, the Swiss "general procurer" -- an omnivalent title if there ever was one -- that she was giving him the green light. Soon, Bagnasco was hinting broadly that the Swiss accounts, code-named ABFICUS and FILASA, showed that the cash shooting around the world between Switzerland, Argentina and Luxembourg had actually originated in the United States.

Bagnasco is demanding that senior IBM executives based in Armonk should come to Argentina to face questioning. There are already warrants out for four of them in Argentina, and Bagnasco threatens to issue an international order for arrest, meaning that like Argentine torturers, IBM execs will never dare leave their own jurisdiction. Maybe the Argentines will put some of their old torturers to work, sending them up as kidnapping squads to infiltrate Armonk and heist the CEO and his lieutenants, just as Bush did with Noriega. No one will be safe.

Argentina is convulsed with this story. In the United States, all is sedate calm. There is a federal prosecutor, Kerry Lawrence, in White Plains, N.Y., looking into the alleged bribery scandal in the context of the Foreign Corrupt Practices Act. Argentina has had its commotions over the "disappeared." There are vanished people and also vanished billions in whose cause, ultimately, those "disappeared" men and women were murdered. Untold billions slithering their way from bank to bank, the criminal surplus of the world system.