DOJ: EMC paid kickbacks, overcharged US agencies

The US Department of Justice last week disclosed that it has intervened in a 2006 lawsuit charging that EMC gave kickbacks to federal IT consultants and overcharged government agencies for hardware, software and services.

Hopkinton, Mass.-based EMC had acknowledged in its 2008 10-K filing with the US Securities and Exchange Commission that the DOJ was investigating the kickback and overcharging allegations, but it quickly denied any wrongdoing.

"We did not make improper payments to business partners, and we did not engage in inaccurate pricing practices," said EMC spokesman Patrick Cooley.

The lawsuit was filed in 2006 in federal court in Little Rock, Ark., by former Accenture employees Norman Rille and Neal Roberts under the whistle-blower provisions of the federal False Claims Act.

Rille and Roberts charged that EMC had been submitting false claims to federal agencies for products and services since the late 1990s.

In a statement issued last week, the DOJ said that "the core of the allegations... is that EMC made payments of money and other things of value (alliance benefits) to a number of systems integration consultants and other alliance partners with whom it had alliance relationships."

It added that the "benefits paid by EMC amount to kickbacks and undisclosed conflict-of-interest relationships."

The DOJ also alleges that EMC effectively overcharged federal agencies by making false statements to the General Services Administration about its commercial pricing practices. DOJ officials declined to comment further on why the department joined the lawsuit.

"The matters at issue in this case are historical in nature; some of the allegations relate to events nearly 10 years old," Cooley said in an email. "We will vigorously defend this case and the many years EMC has spent serving the US government."

EMC said in its 10-K filing that it faces various possible sanctions, including "fines, penalties and other sanctions, including suspension or debarment from sales to the federal government."

The DOJ in 2007 intervened in similar federal whistle-blower lawsuits filed by Rille and Roberts against Hewlett-Packard, Sun Microsystems and Accenture.

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