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Ex-IBM Higher-Up Says Liaison Was Just Business

Fortune insists like many do that Moffat might have replaced Palmisano as CEO

Fortune got to Robert Moffat, the erstwhile IBM server and chip chief now contemplating jail time for being involved with the Galleon insider trading mob, after the book told him it was doing a piece on his affair with his co-defendant Danielle Chiesi.

Moffat told Fortune that the sex wasn't sex it was "business." His lawyers told him not to talk about the liaison but he did say this: "Everyone wants to make this about sex. Danielle had an extensive network of business people. And she added clarity about what was going on the business world...I know in my heart what this relationship was about: clarity in the business environment."

How sad.

And come to find out from the piece that the workaholic at-his-desk-by-6am executive-turned-admitted felon was so intensely loyal to IBM CEO Sam Palmisano - buddies since their days together at IBM's PC Division - that some IBM wag once superimposed Sam's picture over the photographed faces of Moffat's wife and kids.

Fortune insists like many do that Moffat might have replaced Palmisano as CEO. A weeping Moffat reportedly told Fortune he was mortified. Of course he wept. He not only lost his chance at that brass ring, he also lost $65 million in IBM stock options and his pension.

What's going to make Moffat look the real louse is the fact that his long-suffering wife, the aptly named Amor, was diagnosed with MS when their first child was born and under the stress of his disgrace the dormant illness has flared. She now has trouble seeing and walking.

Fortune says Moffat started cheating on her with the Galleon vamp Chiesi to whom he bared his insider soul in 2003, but it was no love match. In the hierarchy of sexual frustration, Chiesi was utterly smitten with her boss, New Castle hedge fund co-founder Mark Kurkland, the first of the Galleon conspirators to be sentenced. But Kurkland wouldn't leave his wife for Dani and merely used her then blamed her for his predicament. He drew 27 months in prison and a $900,000 fine in part because he refused to take responsibility.

Fortune says that former AMD CEO Hector Ruiz, another of Dani's stable of informants, who hasn't been charged or indicted, is still being investigated.

According to Fortune Ruiz let Chiesi "sit in on one of confidential meetings between him and Moffat" about AMD's spin-off of its fabs to Abu Dhabi. Moffat was party to the negotiations because the Arabs needed a chip license from IBM and he was in charge of IBM's chip operations. Chiesi, Kirkland and Galleon CEO Raj Rajaratnam all placed bets on AMD's stock.

It also seems that the ex-IBM CFO John Joyce who introduced Moffat to Chiesi at Chiesi's insistence isn't with Silver Lake Partners anymore. He is still on the board at HP.

Moffat is due to be sentenced on September 13 and is expected to draw six month in the pen. He didn't make any money off the information he admitted he gave Chiesi & company or trade any stock.

A must-read at http://money.cnn.com/2010/07/06/news/companies/ibm_insider_trading.fortu....

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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