NZ, Colorado Telco File Lawsuits Against IBM

The government of New Zealand filed a lawsuit today against IBM Corp., saying Big Blue broke a contract by withdrawing its staff from the development of a police information system earlier this month.

IBM also ran into other legal difficulties in New Zealand yesterday when a Colorado telecommunications company sued the computer giant and its New Zealand subsidiary for allegedly failing to deliver a software program for billing and customer service in an unrelated case.

In the lawsuit involving the New Zealand government, delays in the development of the Integrated Crime Information System (INCIS) sparked controversy in New Zealand in recent weeks with the government and IBM blaming each other.

In a statement released today, New Zealand Finance Minister Sir William Birch said IBM "repudiated" its contract by withdrawing staff on Aug. 9, despite the government's willingness to negotiate with IBM.

"The Crown's position is nonetheless that IBM walked away from a binding legal contract," Birch said. "That is not what the Crown expects from a major multinational corporation." The government is asking for unspecified damages.

The project is three years behind schedule and more than US$10.5 million [M] over its original $50 million [M] budget, according to earlier reports. [See "IBM in Danger of Becoming Baby Blue in NZ," Computerworld New Zealand, Aug. 10]At the time of IBM's withdrawal, a company spokesman said the contract ,for what had become an increasingly complex project, had been fulfilled.

"We've done more work than we've been paid for meeting the needs of the customer," Fred McNeese, IBM's Asia-Pacific communications director, said in the article last week. "We are owed money."

Calls to IBM for comment on the lawsuit were referred to McNeese, who could not be reached for comment today in Japan.

New Zealand official Birch denied reports that the police had demanded unreasonable changes and additions to the project. "The fact is, every significant contract in the fast-moving field of information technology involved large numbers of changes during development," Birch said in his statement today.

In the other lawsuit, a subsidiary of ICG Communications, ICG Telecom Group Inc., sued IBM and its New Zealand subsidiary, DPI/TFS Inc., alleging that they have failed to provide software for an integrated program to process customer input, services orders and billing functions, said Don Teague, ICG's general counsel.

ICG Telecom Group is asking for at least $15 [M] million in damages, Teague said. The lawsuit was filed in U.S.District Court in Denver.

An IBM spokesman in the U.S. declined to comment on the ICG lawsuit.

IBM last year announced that it was changing its business practices in Latin America after situations with its subsidiaries in Mexico and Argentina. The company reached an agreement last year to settle a dispute with officials in Mexico City over a computer system that failed. Meanwhile, an Argentine judge last year was seeking extradition of several IBM employees to question them about an alleged bribery scheme involving a $250 million [M] contract with the country's Banco de la Nacion.

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