In an attempt to show efforts to curb graft and corruption in its own backyard, the state-owned pension fund manager Government Service Insurance System (GSIS) has slapped a criminal case against an official of computer giant IBM.

In a press release on Monday, GSIS legal counsel Estrella Elamparo said they have filed criminal charges against IBM country general manager James Velasquez at the Pasay City Prosecutor's Office. The complaint included former GSIS senior vice-president for information technology services group Edilberto Ocampo, whom Velasquez allegedly conspired with to illegally extend a software contract last year.

Elamparo said they also asked the National Bureau of Investigation (NBI) to look into reported attempts by IBM Philippines to dictate the bid price of a server project and to pressure a bidder to back out.

In a statement released to the media late Monday, IBM Philippines' senior attorney Ida Chao-Kho denied the charges.

"IBM conducts business with the highest standards of integrity, and has done so throughout our engagement with GSIS," Chao-Kho wrote.

Contract extension

Elamparo said the case stemmed from the alleged extension of a software program deal that costs P4.878 million per month.

GSIS has previously inked a one-year contract with IBM for the entire 2007 use of a software program, OS/390. It was extended twice in 2008.

The first extension--from January to March 2008--reportedly went through proper processes. GSIS then was migrating to an "Open" computer application system.

Elamparo, however, said the deal's second extension--from April to June 2008--was illegal on various grounds:

- It was based on a mere ""conforme" letter they had signed by Ocampo and Velasquez.
- The GSIS General Accounting and Budget Office did not certify availability of funds
- There is no confirmation that the extension had been included in the 2008 Annual Procurement Plan of the GSIS

Elamparo highlighted that approval for the alleged illegal extension was sought after the fact. "To highlight the irregularity of the transaction, the request for the direct contracting and payment of the use of the IBM OS/390 software license from April 1 to June 30, 2008 was submitted for approval only after the execution of the aforementioned unlawful extension between respondent Velasquez and respondent Ocampo."

Bidding

The GSIS legal counsel also said IBM Philippines tried to rig a bidding process last year and has asked the NBI to step in.

In the last quarter of 2008, the Bids and Awards Committee of GSIS invited bids for the supply, installation, configuration, testing and implementation of an additional IBM Unix Server.

Three authorized dealers of IBM Philippines--AC Corp, Questronix Corp. Strategic Inc.--joined the bid.

AC Corp, according to GSIS, complained of IBM's attempt to convince them to back out of the bidding process.

Elamparo said she is convinced that IBM Philippines was trying to manipulate the outcome of the competitive bidding since the computer giant dangles discount priviledges --allegedly ranging from 30 to 80 percent--to suppliers.

"Naturally, this means that a dealer with a bigger discount can afford to submit a bid price much lower than the bid price of dealers with lower discounts. Considering that all the bidders are dealers or distributors of IBM Philippines, it is as if IBM Philippines actually dictated the price of its dealers," she told the NBI.

She alleged that IBM could have violated the Government Procurement Act, the law that requires state owned or controlled companies, like GSIS, to level the playing field among suppliers.

IBM's response

In her statement, IBM Philippines' lawyer Chao-Kho said they "do not agree" with the points that GSIS raised.

"IBM and GSIS have worked closely to address the concerns raised and IBM continues to deliver on our commitments to GSIS," Chao-Kho wrote.

"We also continue to have a broad relationship with the Philippines Government," she added.

The company said it is "inappropriate to discuss further details" of these issues in the media.