CORPORATE CRIME REPORTER
IBM
Suspended for Eight Days,
All Hell Breaks Loose
22 Corporate Crime Reporter 16, April 21, 2008
For eight days, IBM could not get a contract with the United States government.
On March 27, 2008, Robert Meunier, the debarring official at the Environment Protection Agency (EPA), suspended IBM.
The issuance of an $84 million contract to IBM was imminent. Evidence of wrongdoing – IBM allegedly had secured protected source selection information from an EPA employee – was significant enough for Meunier to act.
And he did.
But many in the white-collar defense bar say that Meunier should have picked up the phone and called IBM’s attorneys before he acted.
The IBM attorneys – Richard Bednar and his group at Crowell & Moring and Hogan & Hartson’s Ty Cobb – said they couldn’t and wouldn’t comment on the case.
But others in the white collar bar say there should have been some kind of notification to IBM before the government came down with the sledge hammer of suspension.
Meunier disagrees.
“No agency, no agency – I’ll repeat it for a third time – no agency – is allowed during the course of a criminal investigation, without the approval of the investigators and the prosecutors, to call the target of an investigation, to invite them in, to discuss the investigation and say – here is our evidence,” Meunier said. “If you have seen that happen, let me know. I have not.”
Meunier says that the EPA Inspector General and the suspension and debarment attorneys at EPA contacted him about the alleged wrongdoing at IBM.
The award of the contract to IBM was imminent. So he acted.
Meunier said he had no choice but to put IBM on the government wide suspension list.
“If I were not to have suspended IBM, the fruits of the misconduct would have gone directly to the contractor on whose behalf the misconduct occurred,” Meunier said.
Meunier says that this type of suspension occurs every day of the week. The only difference here is that it was with a big company.
The suspension was lifted on April 3, after IBM agreed to withdraw from the contract and cooperate fully with an ongoing federal investigation.
“IBM voluntarily withdrew from the contract on the basis of their own investigation,” Meunier said. “Companies don’t do that unless they are reasonably sure that something went wrong. They withdrew from the existing contract. They have turned over their materials to federal investigators. They have addressed our immediate needs to protect the government. I retain all of my options and privileges – including to once again suspend IBM depending on the course and outcome of the investigation or prosecution.”
Meunier is the closest thing the federal government has to a suspension and debarment czar. He heads the government’s Interagency Committee on Suspension and Debarment.
Arent Fox partner Craig King is not one to point fingers at Meunier.
“If indeed the evidence – which we haven’t seen – was clearly evidence of a violation of the Procurement Integrity Act on this award, and there was a justification for protecting the government from making that award – then he did the right thing,” King told Corporate Crime Reporter. “And none of us can know what that evidence is. And right now it is really between him and IBM. And the rest of the world has a difficult job of judging.”
“It was certainly a big deal that a company the size of IBM was suspended nationwide,” King said. “And from everything that I could determine from the interim agreement, it was intended by EPA to be a big deal.”
King said that Meunier “knew exactly what he was doing.”
“And he did it precisely by the rules with the requisite findings and intended effect,” King said.
“Usually, one would use some sort of an advance notice with a company of this size to allow them to come in and at least tailor the suspension and possibly put in place measures to avoid suspension,” King said.
“And that was not done here because of some unique facts that relate to the nature of the wrongdoing on this particular contract and the imminence of the award.”
“With a big company, it is rare to actually start with a suspension,” King said. “There are informal processes, where a letter is sent. Some agencies call it a show cause letter. Some agencies call it a shock and alarm letter. But it is a letter that goes out and says – we have come to understand certain things. And they seem to give rise to a concern about whether you should be suspended or debarred. This is an opportunity to explain yourself.”
[For a complete transcript of the six page interview with Craig King, see 22 Corporate Crime Reporter 16(11), April 21, 2008, print edition only.]
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