EMC in hot water with Justice Dept.

Storage giant EMC is in hot water with the US Department of Justice over alleged government contract kickbacks and conflict of interest questions.

Specifically the DOJ today filed a complaint accusing EMC of failing to disclose commercial pricing practices during negotiation of General Services Administration (GSA) contracts and of providing improper payments and other things of value to systems on contracts with government agencies.

The suit was originally filed in US District Court in Little Rock, Ark., by Norman Rille, and his co-plaintiff, Neal Roberts, under the whistleblower provisions of the False Claims Act. Under that statute, a private party, known as a relator, can file an action on behalf of the US and receive a portion of the recovery. Under the False Claims Act, the US may recover three times the amount of its losses plus civil penalties.

In their suit Rille and Roberts alleged that EMC submitted false claims to the United States for IT hardware and services on numerous government contracts from the late 1990's to the present. The core of their allegations, in which the DOJ has now joined, is that EMC made payments of money and other items of value to a number of systems integration consultants and other partners with whom it had alliance relationships. The government's complaint asserts that these alliance relationships and the resulting alliance benefits paid by EMC amount to kickbacks and undisclosed conflict of interest relationships.

The DOJ has in the past joined with Rille and Roberts in similar whistleblower suits against Hewlett-Packard, Accenture and Sun Microsystems over alleged improper payments.

The government also alleges that EMC made false statements to GSA about its commercial pricing practices in order to obtain a higher price on its contracts thereby overcharging federal agencies purchasing EMC products and services.

According to and EMC spokesperson responding to a Boston Globe query, the  probe isn't likely to have a material effect on the business and the company is in talks with the government about resolving the investigation without admitting guilt.

If such talks aren't successful and the case goes to court, it could result in a fine or punishment barring EMC from selling to the government, the Globe article stated.

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