IBM has been sued by a shareholder who is worried about how much it hid its ties to what became a major US spying scandal and lost business in China.
Louisiana Sheriffs’ Pension & Relief Fund claims that IBM’s antics caused its market value to plunge more than $12 billion.
IBM lobbied Congress to pass a law letting it share personal data of customers in China and elsewhere with the US National Security Agency. The move was supposed to protect its intellectual property rights.
According to a complaint filed in the US District Court in Manhattan this threatened IBM hardware sales in China, because of fears that Big Blue was letting Prism spy on that country through technology companies.
This lead to China’s government abruptly cutting ties with the world’s largest technology services provider and terrible third-quarter results, including drops in China of 22 percent in sales and 40 percent in hardware sales.
The lawsuit names and shames IBM, Chief Executive Virginia Rometty and Chief Financial Officer Mark Loughridge as defendants.
IBM told Reuters that the allegations are ludicrous and irresponsible and IBM will vigorously defend itself in court.
Louisiana Sheriffs’ Pension & Relief Fund wants a class-action status on behalf of shareholders from June 25 to October 16, 2013, and damages for shareholder losses.
Loughridge is retiring as CFO this month at age 60 and Martin Schroeter, who has been IBM’s head of global finance, is replacing him.