Louisiana Sheriffs' Pension and Relief Fund sues IBM over NSA cooperation

December 14
3:01 AM 2013

The Louisiana Sheriffs' Pension and Relief Fund filed a complaint against the International Business Machines Corp or IBM in a Manhattan federal court yesterday, December 13, Bloomberg reported. The shareholder claimed that the company's cooperation with an eavesdropping program of the National Security Agency led to a drop in China sales to the detriment of its investors.

The lawsuit accuses IBM of defrauding investors by hiding information that sales had slowed after the disclosure by Edward Snowden that IBM was cooperating with the NSA.

The pension fund said that documents which were released by Snowden in June showed that the "Prism" surveillance program of the NSA utilized information from IBM and other technology firms. The complaint further accused IBM of lobbying in favor of legislation that would enable it to share the personal data of its customers with the agency. The data included those from users in China.

In its complaint, the pension fund said, "The company knew but misrepresented or concealed from investors that the disclosures of its lobbying and its association with the Prism and NSA spying scandal caused businesses in China as well as the Chinese government to abruptly halt doing business with IBM, leading to an immediate, and precipitous decline in sales."

IBM said on October 16 that sales in China had suffered a 22% drop compared to that of the previous quarter. The Louisiana fund said the plunge resulted from the disclosures of Snowden. The fund said it pays benefits like retirement, death and disability, to over 20,000 active and retired employees of sheriff's offices in Louisiana.

In a statement, IBM General Counsel Robert Weber said the case pushed a wild conspiracy theory. The report quoted Weber as saying, "This lawsuit seeks to confuse IBM's support for a U.S. cybersecurity legislative proposal -- which has yet to be enacted -- with the completely unrelated NSA surveillance program called PRISM. Even a cursory reading of the legislative proposal, known as CISPA, makes clear that it has nothing to do with the recently disclosed NSA surveillance program."

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