Last week Accenture agreed to pay $63.7 million to the U.S. Department
of Justice to settle a long-running case against it in which the government and
two whistleblower former employees claim it received kickbacks from vendors to
sell products to government agencies at inflated rates, but the IT consultancy
still insists the payments it received from vendors was part of alliance
benefits channel partners receive for working with vendors.
"Accenture did not admit guilt in the settlement so we
can’t assume that they did anything wrong.
The lines are pretty grey on the kickbacks though," says Jeff Hine,
consulting analyst of channel programs for Enterprise Strategy Group. "Assuming they received the alleged
kickback from the hardware (and) software vendors who benefited, how is this
really any different than referral or influence fees that are paid out as part
of some vendors’ standard channel programs?"
In its prepared statement in the matter, Accenture says the
government agency liaisons it works with should know about how channel
relationships work between consultants and vendors and that it was settling the
case to get it off the books and move on.
"The U.S.
federal government was aware of alliance relationships in the IT industry and
how they would benefit customers, vendors and the IT industry,"
Accenture’s statement said. "The details of how alliances worked in the IT
industry were widely reported in the industry press."
Filed in the U.S. District Court for the Eastern District of
Arkansas several years ago, the lawsuit was first started by Norman Rille and
Neal Roberts, a former employee and a lawyer specializing in fraud cases
brought to light by whistleblowers. In 2007 the Department of Justice joined their
crusade as plaintiffs more than two years after they filed. Together the agency
and the whistleblowers accused Accenture, along with HP, EMC, Computer Sciences
and dozens of other vendors in several additional lawsuits, of passing tens of
millions of dollars amongst themselves to have Accenture give the vendors
involved preferential treatment within government contracts.
To date, the government had already received tens of
millions in settlement money from a number of technology vendors accused of the
kickbacks. Last year HP paid $55 million and EMC $87.5 million to settle the
charges. Cisco Systems and distributor Westcon Group North America also paid
the government $48 million to settle a different but similar dispute, a
settlement for which the Department of Justice agreed to dismiss the Accenture
case against it.
Though the government is not announcing how much Rille and
Roberts will receive for their part in the case, both men filed their suits
under the U.S. False Claims Act, which entitles them to between 15 and 30
percent of the settlement funds.
"While I can’t defend any unethical or illegal activity
if it happened, I think there is an irony here that Accenture was accused of
kickbacks, and those who accused them will be getting a big
"kickback" under the government’s own whistleblower program in the
form of a percentage of the settlement," Hine says.
Because none of the cases went to trial, it is still
difficult to say how these lawsuits will affect vendors and their partners who
work with government agency. Without any judgment or admission of wrongdoing,
no precedence has been set. However, there is no guarantee that similar cases
won’t be brought against the industry again. According to Hine, the case should
at least be a warning for better transparency with end customers.
"Perhaps in the long run, it will turn into a matter of
transparency, and customers should demand from their partners visibility into
where they have agreements for referral fees in place," Hine says.