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Last updated: Sun. Feb. 12, 2012 - 09:36 am EDT

State justices to weigh IBM arguments

The intricacies of Indiana’s split with IBM gets another airing Monday, when the highest court in the state will gather on the third floor of the Indiana Statehouse to hear attorneys’ oral arguments on the value the governor’s testimony.

The debate already has cost Hoosier taxpayers at least $8 million, according to a contract with law firm Barnes & Thornburg, which was hired to represent the state’s social-services agency.

IBM attorneys have argued Gov. Mitch Daniels was an architect of the deal and asked for his deposition, and in December, the Marion Superior Court agreed.

An initial court ruling shielded the governor based on an old state law prohibiting the governor and other elected officials from subpoena. IBM attorneys pushed back after the governor wrote about the IBM contract and his firing of the company in his 2011 book.

In December, Judge David Dreyer ruled the “unprecedented investment of public resources” in the case made it illogical to exclude Daniels’ participation.

IBM attorneys have entered into evidence thousands of pages of emails created by the administration, including Daniels, regarding the contract, but the contents of those emails have not been made public.

At issue are two lawsuits, filed the same day in May 2010. IBM sued the state for $53 million in contractual fees and equipment, while the state sued IBM for more than $400 million it paid the company.

About a quarter of the contract’s original $1.16 billion contract with IBM had been paid to the technology company when Indiana canceled the contract in 2009.

Late last month, Marion Superior Court issued a summary judgment ruling on several issues in the dispute. The court ruled many of the matters at issue should be resolved at trial, including whether IBM should receive $43 million in deferred fees and more than $9 million for equipment the state kept after the contract was canceled.

IBM, in a statement, said the state’s refusal of its contractual obligations endangered Indiana’s business environment and would be a deterrent to businesses considering moving or expanding operations to Indiana. IBM Corp. has some existing contracts with state agencies, but none that approaches the scale of the FSSA program, according to state records.

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