U.S. Says EMC Paid Kickbacks On Contracts

Government has accused data storage maker of paying kickbacks to partners on government contracts, a charge the company said it intends to defend itself against ‘vigorously.’

WASHINGTON (AP) -- The government has accused data storage maker EMC Corp. of paying kickbacks to partners on government contracts, a charge the company said Monday it intends to defend itself against "vigorously."

The Justice Department is alleging that EMC failed to disclose its commercial pricing practices when it negotiated government contracts and is accusing the company of providing improper payments and other things of value to systems integrators and other alliance partners on government agency contracts.

The U.S. is joining a suit originally filed in U.S. District Court in Little Rock, Ark., which alleges that EMC submitted false claims to the government for information technology hardware and services on numerous government contracts going back to the late 1990s.

The government's complaint asserts that payments made to partners on the contracts amount to kickbacks and undisclosed conflict of interest relationships. The U.S. also alleges that EMC made false statements about its commercial pricing practices to the U.S. General Services Administration (GSA) in order to obtain a higher price on its contracts -- overcharging federal agencies for its products and services.

In its 10-K filing with the Securities and Exchange Commission, EMC said it has cooperated with both a previous audit by the GSA and the DoJ investigation, and has had discussions aimed at settling the matter without any admission or finding of liability on EMC's part.

"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," the company said in the filing.

However, EMC noted that if the matter goes to court, it could face damages, fines and other sanctions, including suspension or debarment from sales to the federal government.

More in Industry 4.0