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Russia Claims IBM Employees Sought To Defraud Country's Pension Fund

Russia's Ministry of the Interior says it's investigating a $4 million computer equipment kickback scheme involving IBM employees and employees of Russia's national pension fund, as well as staffers at IBM local partners R-Style and Lanit.

No IBM employees were arrested as a result of Wednesday's raids by Russian authorities on the company's offices in Moscow, and the status of the computer maker's head of operations in the country remains unchanged, according to sources familiar with the situation.

But Russia's Ministry of the Interior says it's continuing to investigate what it says is a $4 million computer equipment kickback scheme involving IBM employees and employees of Russia's national pension fund, as well as staffers at IBM local partners R-Style and Lanit.

"To embezzle the allotted funds, a number of high ranking [pension] officials responsible for conducting tenders for equipment purchases conspired criminally with representatives of the commercial companies," the ministry said in a statement Thursday.

The statement was carried by Russia's Interfax news agency.

On Wednesday, an armed special forces team attached to the ministry swept through IBM's offices in central Moscow, seizing documents and gathering other evidence. The team members wore masks and carried automatic weapons, according to witnesses.

An IBM spokesman in Moscow said Thursday that the company's business operations in the city "are continuing uninterrupted," and IBM is "cooperating fully" with Russian investigators. He declined to comment further.

Sources say arrests have not yet been made in the case, and that Kirill Korniliev, IBM's head of operations for Russia and Eastern Europe, remains on the job. There are no indications that Korniliev is in any way connected to the case.

Still, Korniliev may need to quickly organize a damage control operation. Russia is becoming an increasingly important country for IBM as both a market for technology and a source of programming talent, so any lasting damage to IBM's reputation there could prove costly for the company.

In June, IBM CEO Sam Palmisano personally opened the company's first Russian software development center and pledged to invest $40 million over the next three years in the facility. "Russia is a fast-growing marketplace, where business is being transformed almost daily. We're here to contribute to Russia's growth," Palmisano said at the time.

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