Allegations by a government-owned Turkish bank that a software firm, Kirchman Corp., was involved in a bribery scandal have created difficulties for the company's overseas sales efforts, its founder said.
The bribery allegations stem from a multiyear, $40 million contract that Kirchman, of Orlando, won in 1990 to supply computers and core banking software to Emlak Bankasi, a government-owned, housing-finance bank.
"It's probably affected our sales internationally," said Kenneth P. Kirchman, the company's founder, owner, and chairman.
First Overseas Customer
The contract called for Emlak Bankasi to be the first foreign bank to install a new version of Kirchman's Dimension banking software designed for institutions outside the United States.
The Dimension software runs on mainframe computers, and supports all of a bank's core operations, including foreign exchange, multicurrency accounting, and general ledger.
Mr. Kirchman said that Emlak Bankasi installed the software in 1992.
But the bank later took the software out, amid allegations that part of the money paid to Kirchman had been funneled into bribes to unnamed individuals.
Involvement Is Denial
In an interview with the American Banker, Mr. Kirchman categorically denied that his company had been involved in a bribery scheme.
"We don't do that king of thing," he said.
Mr. Kirchman added that Turkish or U.S. government officials, or executives at Emlak Bankasi, have never contacted the company to ask about the bribery allegations. Kirchman Corp. has not been charged with breaking any laws in Turkey or in the United States, he added.
But the allegations did make it into the Turkish press. A leading national newspaper, Sabah, carried a front-page article on the bribery allegations in March.
In the story, Sabah said that Emlak Bankasi had agreed to pay nearly five times what the software and computers were worth. The newspaper added that an independent "Swiss company" was hired by Emla Bankasi to look into the matter, and that the Swiss company had concluded that nearly $20 million in bribes were paid.
Political Move Seen
Officials of Emlak Bankasi and Turkey's embassy in Washington declined to comment on the allegations.
Mr. Kirchman said that the Turkish newspaper never tried to reach him for comment.
Mr. Kirchman also offered an explanation for the controversy.
He said he believed the bribery allegations were a political move by Turkey's new government to discredit its predecessor.
"I think it's part of their culture to sometimes do things like this to make a point," he said.
Potential for Harm
Turkey's Motherland Party, which had been in power when the Kirchman deal was approved, was ousted in 1991, when parliamentary elections brought a new government to power, a coalition of the True Path and Social Democratic parties.
Sabah reported that the bribery investigation was instigated by new Emlak Bankasi management that had been installed by the new coalition government.
But even though he considers the bribery allegations to be unfounded. Mr. Kirchman said they had been widely circulated, and had the potential to hurt his company's reputation with foreign banks.
The controversy could also impact Kirchman Corp. financially..
Mr. Kirchman said that his company has annual revenues of about $60 million. From late 1990 until 1992, the company received about $20 million from the Emlak Bankasi deal.
The payments stopped when the Dimension software was removed, Mr. Kirchman said.
But Mr. Kirchman said he was optimistic that Emlak Bankasi will reserve its decision, and start using the Dimension software again.
"We're still very positive about it," he said.
He added that Emlak Bankasi has "had some trouble with the old system," a reference to software that the bank had used before installing the Kirchman software, now being used again after the Dimension software was removed.
About 6,000 banks in the United States and 35 foreign banks use Kirchman software to manage their core operations, Mr. Kirchman said.
Only one bank besides Emlak Bankasi has agreed to buy the international version of Dimension so far, Mr. Kirchman said.