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It is being reported that IBM (NYSE:IBM) - the world’s largest provider of computer services - is under investigation by the U.S. Environmental Protection Agency and has been temporarily suspended from seeking new business contracts with all U.S. agencies.

IBM received a notice of temporary suspension from the Environmental Protection Agency tied to possible violations of ethical bidding provisions of federal law on an EPA contract submitted in March 2006.

Furthermore, the U.S. Attorney’s Office for the Eastern District of Virginia had served IBM and certain employees with grand jury subpoenas requesting testimony and documents on interactions between the EPA and IBM employees.

According to International Herald Tribune, IBM said - the company is cooperating with the investigations. However, it only learned of the government contract suspension on Friday, March 28 and that it was unaware of any potential action by the EPA or the U.S. Attorney’s office until then.

IBM shares, closed 0.5 percent higher in regular trading on the NYSE before the disclosure, lost 1 percent in extended trading by posting $115.14 on L2.

IBM said that it intends to take all appropriate actions to challenge the suspension and limit its scope while emphasizing that the company has served the federal government for many decades as a vendor in good standing and is “committed to the highest standards of business ethics”.

Source: IBM Takes a Hit - Suspended From New Federal Work