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Pressure Is On IBM To Forgive Millions In IT Debt
coondoggie writes to tell us that several California state legislators are pressuring IBM to release the Costa school district from some $5 million of long-standing debt as a charitable donation. "The back story on this tale is that the school district owes IBM for computers ordered in the late 1980s and early 1990s. For one reason or another the computers were never used and no one now seems to be able to locate either the paperwork or the hardware. The school district experienced hard financial times and ultimately never paid Big Blue for the computers. In 1993 the district and IBM negotiated a long-term settlement that said the school district would pay the first of four $1.25 million installments beginning in 2008. Payments were deferred until then because 2008 was the year the district was scheduled to finish making state loan repayments under its previous loan plan, according to the Contra Costa story."
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And obsoleted computers does not mean they should be let off their debt. I reckon I may leave everything I owe for 27 years or so then claim that.
Seriously instead of saying "let us off" they should be saying "here's your money, _please_ don't charge us interest or take us to court".
They agree to defer payments for 15 YEARS, and now that they're finally at the time they might have to actually start paying something they want to just pressure them to make it go away entirely? Yow.
Oh, so that makes it OK to rip IBM off.
Well, "honorable" lawmakers, how many of your teacher's pensions are in IBM stock?
Or what about your investments?
Or some of your other constituents - many who are retired and are relying on IBM making an actual profit in order to make money on their retirement investments.
Not all stock investors are rich, fat, white, dudes who nobody has pity for.
Mental note: Do not give credit to the CA schools - cash only.
I prefer Flambe as apposed flamebait.
So, yeah, about the 5 million... well, we were kinda expecting you to forget about it ya know? Thats what friends are for, right?
On a serious note, I am surprised at no mention of paying a smaller amount or anything.. No they expect IBM to just forget about the whole thing.
...this invalidates the forgiveness part of their plea: Unaccountability encourages corruption.
"What you subsidize, you get more of".
Have the school district *try* a little harder to find out where it all went.... a good first step.
If the taxpayers het mad enough at the failure to do this, *then* you'll get some accountability, although late.
BWilde
Wow, this is amazing. They ordered computers, which were never used... shouldn't that be an outcry? That school-district must have had a terrible administration at that point. I really don't see how the argument that they never used the equipment has anything to do with why or why not they should pay the bill. Afterall, IBM delivered, so why should they not get paid?
If it wasn't for the fact that the administrators that created this mess are probably all not working there anymore, I'd say they should pay the full amount, with interest, as punishment for wasting the taxpayers dollars!
Besides...lets say they were using the computers. How does the fact that they're missing affect whether they can pay for them? Surely the district didn't place a $5 million order with no means to pay for it?
I wish I could order so much gear that I don't even get around to using it AND get the purchase loan forgiven. This story is a case of blatant class warfare; Who care what IBM's revenue was last quarter in regards to what appears to be a school district's wild fiscal irresponsibility? IBM is not the bad guy here, the bad guy(s) are the school board who approved the budget to purchase the equipment in the first place and then totally failed to see that it was put to use.
More likely the delivery was received by the staff, and then immediately returned.
The office I worked in as a intern had the exact same problem. They made out an order for 50 IBM PC's for a training room. Instead, they received 50 IBM PS/2's that came
in huge palette sized boxes of 25 each. These had to be dismantled inside the container before we could take them out. As soon as our boss found out what they were, they were immediately returned.
This article seems to suggest a similar thing happened.
Nobody seems to know how many or what type of computers Marks ordered, or even whether they ended up being used. Several former district officials called them "obsolete" and "useless."
Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
to a collection agency. Let the agency buy the loan at a discount and then harrangue state officials until they ante up. It would be good for the officials to experience the same kind of pressure and hectoring that they allow consumers to endure...
The contest for ages has been to rescue liberty from the grasp of executive power. -- Daniel Webster
Which school board? The one 15 years ago that approved the equipment and then let it get stolen, or the one now that's stuck with the bill?
It sucks that elected representatives do this so often, but what's the answer for it? The people doing it know they won't be there to answer for it! Kind of like our current administration at the federal level pissing away money on Iraq while the situation there gets worse every day, and leaving it to the next administration to make the hard decisions and clean up the mess.
I love that part. I wish I could just order $5M worth of computer equipment using the taxpayer's wallet and then blame IBM for being hardhearted and cruel for not forgiving the debt. Why is the media not reporting on the waste and/or fraud involved in the original contract? Obviously, computers that were never used were not "needed", since the school district is still there and is apparently serving students. Who signed the original deal and what did he/she get out of it?
Intron: the portion of DNA which expresses nothing useful.
"Unlike corporations such as IBM - with revenues of $22 billion in the first quarter of 2007 alone - our schools do not have the ability to generate new dollars to fund projects or pay for employees," the lawmakers wrote. "Our schools rely solely on limited state and federal assistance to educate our students and every dollar is precious."
If every dollar is precious, they should've thought twice before spending $5 million in hardware that was never even used!
This district's atrocious conduct is precisely the reason why IBM should not forgive the debt.
Meanwhile, the State of California has insisted on, and gotten, much stricter terms (including interest.)
Now, the State is suggesting that IBM should forgive their loan altogether?
Maybe, if forgiving those loans is so good an idea, the State of California should go first?
Lacking <sarcasm> tags,
there is no reason that a resident of another state, or even another city (taxpayers, all), should bear the burden for a bad local decision.
"National Security is the chief cause of national insecurity." - Celine's First Law
as mentioned in the comment section of the network world article:
"of course, it's worth pointing out that Contra Costa County is the predominant county and tax base for the East Bay -- a sprawling set of towns/cities full of people that work in downtown San Francisco, Oakland, and Silicon Valley. It's the same county where median home prices for most of the towns are well north of $500,000.
To quote the Contra Costa website: "Due to the presence of relatively high-wage skilled jobs and relatively wealthy residents, the County achieves high rankings among all California counties on a variety of income measurements."
This isn't the story of an impoverish[ed] county begging for debt relief from an evil corporation. Move along."
Which school board? The one 15 years ago that approved the equipment and then let it get stolen, or the one now that's stuck with the bill?
Except the school board isn't stuck with the bill. At least in that the individuals on the board don't have to pay it. It isn't going to affect their salary or anything in any way. The money will have to come from them cutting back on other educational expenses. So the people who are going to suffer are the kids who weren't even born when the deal was made.
posting because I accidentally modded you up
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Right. That's the problem. Now people who elect these school boards need to make informed decisions and not allow people of questionable character in public office. But the people who lose have little to do with anyone who made any of the decisions. Since it sounds like the computers walked off, the real answer might be to get the police dept on the case to see if there's any way they can figure out who took them. The statute of limitations might have expired by now, but a few criminal charges wouldn't hurt if they do find the responsible party. This kind of shit happens all the time in school and public utility boards with poor accountability. IBM might even have a share of the blame if they sold excess equipment on a public procurement contract with no sense that it was going to be useful to the district. Based upon that there's an argument for getting IBM involved in the solution to this other than just paying them back.
if IBM were smart, they would try to cut a deal with the CA state to buy more goods from them in exchange for forgiveness.
I prefer the "u" in honour as it seems to be missing these days.
The basic problem is, in 1992, they got a superintendant who was going to revolutionize everything. New schools, new ways of doing things, the works.
He turned out to be a corrupt bastard, but he disappeared without ever having to pay or atone for anything, and the people who use the schools have been paying for it ever since.
The school district is broke as hell, and quite honestly, will probably go bankrupt before they pay IBM (if by 'pay' you mean 'pay in the next 50 years').
All the other comments here seem to be going 'lol pay up already', but it's not that simple. IBM should forgive the debt, and everyone should learn a lesson from this:
Don't let public institutions pay with credit. The people who make decisions are not held responsible, and thus do not make responsible decisions. They will rip you off, and rip off the people they are supposed to be representing.
Lessee, the school district has such lousy financial controls that they can't account for the systems, and they can't pay for them. Typically, the socialist argument is to not hold them accountable. I say bankrupt the district and put some people in who won't let $5M get STOLEN.
From this article it appears there was a real battle over the useability of the systems, and the district
did try and get the machines sent back.
Former school board member Frank Calton said he remembers the deal with IBM being touted by Marks as a mutually beneficial partnership.
"This was submitted to us as kind of a joint venture where IBM could showcase computers as learning tools for students," Calton said. "It was supposed to have a PR angle for IBM."
When asked by the Times last week, the district could not track down invoices for the purchases, so it is unclear how many and what type of computers were ordered. But administrators agree the computers already were outdated when the district got them.
"I think they were out of date before (Marks) even decided to buy them," Basalto said. "Every one of them was obsolete; they were absolutely useless."
Where the computers ended up also is a mystery. Basalto recalls that some were installed in schools, but some sat in warehouses, possibly never turned on.
The district tried to return some of the computers, said Ruth Vedovelli, West Contra Costa school district's current finance chief. IBM refused to take them back, leading to a years-long fight that also included battles over the actual cost.
Negotiations often got ugly, with Fred Stewart, the state trustee appointed to oversee the district's finances after it went into debt in 1990, often getting into shouting matches with IBM representatives, says Herb Cole, Marks' successor.
"He said, 'We can't pay you, so if you want them, come and get them,'" Cole said, adding that Stewart threatened to put the computers on the curb. "He was tough as nails with them at the time."
Stewart, who recently retired as the state trustee, declined to comment.
In late 1993 -- four years after the district agreed to buy the computers -- the parties reached a settlement that called for deferring the first major payment until 2008. That was the year the district, under its previous loan structure, was scheduled to be finished paying back $28.5 million it owed the state.
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It is the taxpayers fault, and they DESERVE to pay for it. Either by higher taxes or crummier education for their kids.
They had a inept, corrupt school system. 5 Million in computers go poof! Is their outrage? Who's head ended up on the block? Who had to pay for this? So far no one. IBM has been nice, and has made a 15 year 5 million dollar interest free loan.
People 15 and 20 years ago were responsible for this. The city, the school board, the voters and tax payers. They did not pay the piper....It has been put off till now. It is time to pay.
If the city had taken out loans, were improving the school district, etc. Then there was some big natural disaster, something beyond their control. I could see IBM feeling generous and forgiving the debt. But this is due to the school districts own stupidity.
If a car lot (yes another car analogy), sold you a car for $30,000.00, you have a million dollar home for collateral. Your worthless brother in law runs off with the car. You are having cash flow issues, and can't really afford to make the payments. Why should the car lot forgive you this loan?
They entered into a business deal with a party who had the ability to pay. Just the party mismanaged things and has the sob story, why should IBM have to eat it? Because "they can afford it" just does not cut it. IBM could also afford to cash out, take the money and run. To not sell hardware to anybody any more. But no, they are staying in business to do business. They are not extorting their customers. They should not have to eat it. Let the tax payers who allow such government pay for it.
vi +