Justice Dept. charges EMC with kickbacks and false statements

According to a complaint filed by the US Department of Justice, EMC made payments of money and other "things of value" to systems integrators and other alliance partners around government contracts, and these payments amount to kickbacks and "conflict of interest relationships."

The government also charges that the storage vendor made false statements to the US General Services Administration (GSA) about its commercial pricing so as to get higher pricing on government contracts, thereby bilking federal agencies.

The DOJ announced on Monday that it is chiming in on a suit initially filed by experienced whistleblowers Norman Rille and Neal Roberts under the False Claims Act. Under whistleblower provisions of the act, private parties -- known as "relators" -- can file legal actions on behalf of the US Government and receive a portion of the money recovered.


The two whistleblowers in this case, Rille and Roberts, alleged earlier that EMC violated other provisions of the act by making false claims to the US for IT hardware and services on many different government contracts from the 1990s through the present.

EMC has acknowledged the legal charges in its latest annual report, but denied any wrongdoing.

"We believe that we have meritorious factual and legal defenses to the allegations raised and, if the matter is not resolved and proceeds to litigation, we intend to defend vigorously," EMC said in its regulatory filing.

Rille and Roberts have also initiated at least three similar suits against IT companies. A 2007 action against Hewlett-Packard, Sun Microsystems, and large systems integrator Accenture charged that IBM, Oracle, SAP and other partners received millions of dollars in kickback payments through Accenture.

A separate case by the two "relators" against Computer Sciences was settled for $1.37 million, while a case against IBM and systems integrator PriceWaterhouseCoopers ended in a $5.3 million settlement.

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