Former Server GM Moffat Leaves IBM Under Scandal Clouds

Published: November 2, 2009

by Timothy Prickett Morgan

IBM told employees of its Systems and Technology Group in an internal memo last Friday that Bob Moffat, who has been linked to an insider trading scandal that erupted two weeks ago in New York, has left the company.

Big Blue did not elaborate much on the situation, as has been the case since the insider trading scandal centered on two hedge funds--Galleon Group and New Castle Group--came to light on October 16. That Friday, Moffat, who was previously senior vice president and general manager of IBM's Systems and Technology Group, was arrested by the FBI and charged by the U.S. District Attorneys office in Manhattan for supplying information to Danielle Chiesi, an employee of New Castle, regarding quarterly financial results for IBM and Sun Microsystems, as well as alerting Chiesi to the fact that Advanced Micro Devices was going to spin out its chip making operations. AMD did actually do this, and New Castle and another fund called Galleon, owned by billionaire Raj Rajaratnam, shared information about the AMD spin-off and bought long on the stock because they knew it would rise on the news. (You can get details on the insider trading scam here.) As far as anyone knows, Moffat only talked out of turn and did not benefit personally from any of the insider trades.

The following Monday, as we reported in last week's issue of The Four Hundred, IBM put Moffat on a leave of absence and quickly named Rod Akins, another rising star like Moffat was, as the new head of STG. Adkins was previously senior vice president of development and manufacturing for STG and was given the temporary general manager position, running the whole STG show and reporting directly to Sam Palmisano, IBM's president, chief executive officer, and chairman.

Last Friday (October 30), IBM made it official. "Rod Adkins, who was named acting head of IBM's Systems and Technology Group on October 19, has been appointed senior vice president of STG," the internal memo read. "Bob Moffat, who had been placed on leave of absence as a result of a U.S. Federal investigation into his personal activities, is no longer an employee of IBM."

While there are a lot of questions surrounding this insider trading scandal, and this is probably not the last time we will hear about stuff, the one question everyone wanted to know last Friday is whether Moffat left or was asked to leave. IBM ain't telling. "IBM has a policy of not commenting on the personal issues of current or former employees," spokesperson Ed Barbini told me.

This was a personal matter, then. Not business. Well, except for the hedge funds, of course.

All I know is that IBM lost a very seasoned executive--and one I had a sneaking suspicion might have started selling off chunks of the IBM server business since Moffat was the executive behind selling off the PC and printer units, probably had a say in the disk business sell off, and had moved IBM's supply chain operations to Asia. I think I am breathing a little easier for the AS/400's progeny, but actually have not one bit of information about what Moffat might or might not have thought about the midrange platform. But this seemed like an exec whose job it was to shut down businesses or offshore them.

Anyway, it's back to International Business as usual.

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