Agents in the Federal Bureau of Investigation’s Washington field office and fraud prosecutors in the Justice Department’s Criminal Division are handling a criminal investigation, which has been under way for at least a year, according to people familiar with the matter. Attorneys at the Securities and Exchange Commission are also investigating for possible civil violations, these people said.

Read the rest of this post on the original site »

The issuance of such subpoenas, which would broadly seek relevant information from the company, requires approval by senior Justice Department leadership, which hasn’t yet happened, the person said.

The issuance of subpoenas would represent an escalation of scrutiny on the New York-based media company. While the company has sought to isolate the legal problems in the U.K., it has been bracing for increased scrutiny from both the Justice Department and the Securities and Exchange Commission, according to people familiar with the company’s strategy.

Read the rest of this post on the original site »

But what if you’re a company who doesn’t always sell directly to your customer, but rather relies on a reseller who stands between you and the end customer? That’s a different dynamic entirely. And it may seem like an insignificant detail until you consider that there are more than $2 trillion worth of goods sold annually through indirect business-to-business sales relationships.

Companies tend to call these “channel sales,” or use some variation of that phrase to describe this aspect of their business. And it brings with it a level of complexity that’s different from conventional direct sales.

And as Mark Geene, the CEO of Channelinsight tells me, it’s a sector of sales that has yet to benefit from the kind of productivity gains that Salesforce.com and SAP have brought to direct sales. The company has created a cloud-based service that does two things: First it aggregates live data, including inventory and point-of-sale data provided by a network of some 5,000 business-to-business resellers, distributors and retailers. Then it combines that with some screening and analytics tools that can run either as a standalone application or as an add-on to Salesforce.com. You can see who bought your stuff, who the end customer was, whether or not incentives or other programs are working, and whether or not they have inventory in the right places given demand trends.

“Indirect sales have been sort of the stepchild of salesforce automation,” Geene told me. “It hasn’t benefited at all from the kinds of things that Salesforce and SAP have been doing.” Managing indirect sales is often a rather labor-intensive process involving a lot of time looking at spreadsheets. Channelinsight’s play is to automate that process.

It must be working. Customers include printer manufacturer Lexmark and the chipmakers Advanced Micro Devices and Nvidia, both of which sell a great deal into the channel, as well as the German industrial giant Siemens. That sounds like momentum.

Channelinsight just closed a $10 million Series C round led by Rho Ventures, with participation from Sevin Rosen Funds, Sequel Venture Partners and Vendanta Capital. Its total venture funding so far is $21 million. Paul Bartlett, a Rho Ventures Partner, is on Channelinsight’s board.

“Our expertise is in identifying and investing in companies that redefine the status quo,” Bartlett said in a statment. “Channelinsight fits this profile by reinventing the way channel sales are managed, saving companies millions of dollars in the process.”

Separately, Channelinsight said it added Ram Gupta, the former CEO of Cast Iron Systems, which IBM acquired last year, to its board of directors.

Geene is a former Oracle vice president who ran its mid-west sales, and has held senior management jobs at Tenfold and Dorado Software.

He told me one big problem companies often run into with indirect sales is screening for regulatory compliance–in particular the Foreign Corrupt Practices Act, which covers, among other things, bribery.

You may remember that last month IBM settled allegations by the U.S. Securities and Exchange Commission that it paid bribes to officials in China and South Korea during a period beginning in 1998 and ending in 2009. IBM never admitted to any wrongdoing, though as the SEC noted, the purpose of the payments was to “secure the sale of IBM products through IBM-Korea and LG-IBM’s business partners.” Hewlett-Packard had its own headache with bribery allegations in Russia last year.

This is the sort of thing that Channelinsight can help a company watch for, Geene said. “This is a big issue for any company that works with partners,” he said. “We screen every transaction that gets processed on our system, looking for red flags.” It also looks for instances where products might be sold indirectly via partners to countries that are subject to trade embargoes. This sort of screening is something that companies have till now generally had to manage manually with some sort of custom solution.

The purpose of the payments, the SEC said was to “secure the sale of IBM products through IBM-Korea and LG-IBM’s business partners,” referring to IBM units in South Korea and China. During the 1998 through 2003 it says IBM paid about $207,000 in bribes to officials of the South Korean government in cash, gifts, and travel and entertainment expenses and free computers. And from 2004 through early 2009 it “engaged in a widespread practice of providing overseas trips, entertainment and improper gifts to Chinese government officials.” The misconduct in China involved as many as 100 employees of IBM China, the SEC said. The actions constitute a violation of the Foreign Corrupt Practices Act of 1977, the SEC says.

The payments described sound like they come straight out of a bad screenplay. In 1998, the SEC says, a territory manager for IBM-Korea met the head of operations for a South Korean government agency and gave him a shopping bag full for 20 million Korean won or about $19,000. Over time the same official received payments totaling about 80 million won or about $76,000 by 2001. What did IBM supposedly get in return? Designation as a preferred supplier for mainframe computers, and an agreement to place orders at higher prices.

In China, the SEC says IBM-China employees created what it describes as “slush funds” with local travel agencies that were used to pay the travel expense incurred by local government officials. Other slush funds, it says, were created with business partners to provide cash payments and gifts like cameras and notebook computers. The SEC says it found 114 instances where IBM-China employees and a travel agency created fake invoices to match approved travel requests but for trips that had nothing to do with legitimate business purposes. The trips were accounted for as “training services” on IBM-China’s books.

IBM just sent me the following statement: “IBM has agreed to settle an enforcement action with the US Securities and Exchange Commission relating to activities by employees of IBM Korea and IBM China during the period from 1998 through 2009. IBM insists on the highest ethical standards in the conduct of its business and requires all employees to follow its policies and procedures for conducting business.”

A spokesman for prosecutors in Bonn, where Deutsche Telekom is based, said the office opened the inquiry after reviewing documents provided by the U.S. Securities and Exchange Commission, Federal Bureau of Investigation and Justice Department earlier this year.

U.S. officials have been investigating the company’s activities in the Balkans since 2006 and had asked German prosecutors to assist by collecting witness testimony in Germany.

German prosecutors searched Mr. Obermann’s office and one of his two homes on Aug. 31, said Manfred Balz, Deutsche Telekom’s management board member responsible for compliance, at a news conference Wednesday. The search included computers and documents belonging to Mr. Obermann and to employees who haven’t been named as suspects.

Read the rest of this post on the original site

That country’s Directorate of Revenue Intelligence this week claimed that HP ducked some $322 million in customs duties by undervaluing shipments of computers, printers, scanners and other devices into the country. According to the DRI, the evasion is India’s largest ever and has been going on for at least five years.

HP (HPQ), which has cooperated with the agency’s investigation, said it plans to contest the claims against it.

The U.S. Securities and Exchange Commission and Justice Department are investigating whether H-P committed any violations of the Foreign Corrupt Practices Act, these people said, as part of a widening probe into the company’s activities. The SEC investigates civil violations of the FCPA, while the Justice Department has jurisdiction over criminal components of the U.S. law. The law bars American companies from bribing foreign government officials anywhere in the world.

A spokeswoman for H-P said the company had discussions Thursday with the SEC regarding the German investigation “and is fully cooperating with U.S. and German authorities on this matter.”

German prosecutors have centered their investigation of the suspected bribes on one current and two former senior executives of the U.S. computer maker, according to German court records and people familiar with the probe.

Read the rest of this post on the original site

German prosecutors are looking into the possibility that H-P executives paid about €8 million ($10.9 million) in bribes to win a €35 million contract under which the U.S. company sold computer gear, through a German subsidiary, to the office of the prosecutor general of the Russian Federation. The office handles criminal prosecutions in Russia, including many corruption cases.

Russian investigators raided H-P’s Moscow offices Wednesday in connection with the probe, the people familiar with the matter said. The search was requested by German authorities, according to a statement posted on the Russian prosecutor’s Web site.

Read the rest of this post on the original site