IBM dismisses NSA lawsuit as 'wild conspiracy theory'

Big Blue accused of working with NSA and not disclosing to shareholders the resulting risk to its Chinese business

IBM has vowed to "vigorously fight" what it described as a "baseless" lawsuit which accuses it of not only colluding with the NSA in a spying scandal but also concealing the related risk to shareholders.

In the summer, the US National Security Agency (NSA) was accused of working with top tech firms such as Microsoft, Apple and Google to snoop on users' data, and in a recent suit filed by the Louisiana Sheriff's Pension and Relief Fund (LSPRF), IBM was accused of taking part too.

The LSPRF said IBM "misrepresented or concealed" from shareholders that its links to the spying scandal would damage its performance in the Chinese market, according to Bloomberg. It added that Big Blue's alleged NSA links caused businesses in China – as well as the Chinese government – to "abruptly halt" business with IBM which led to an "immediate and precipitous" sales slump.

In IBM's third quarter, sales in China dropped annually by 20 per cent, or 22 per cent at constant currency.

But Big Blue strongly denied the accusations, dismissing the lawsuit as "pushing a wild conspiracy theory".

IBM's general counsel Robert Webber said the suit confused NSA involvement with his firm's support for a US cybersecurity legislative proposal which helps protect companies from cyberattacks.

"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 programme," he insisted.

"Starting from this fictitious connection between CISPA and PRISM, the complaint proceeds to make numerous specious and false accusations, and IBM calls upon the law firm that filed this action to do the right thing and dismiss this action immediately.

"To fail to do so is a profound disservice to the judicial system, to the public, and in this case, to IBM. IBM will vigorously fight this baseless lawsuit."