The Seoul District Prosecutors Office said 12 people had been arrested and remanded in custody while 36 others were also indicted.
It was the biggest corporate corruption case involving any foreign companies or subsidiaries doing business in South Korea.
Prosecutors say the case shows deep-rooted corruption here between businessmen and government officials.
The prosecution said officials at IBM Korea and its two sister firms - LG IBM and Winsol - bribed government officials or colluded with other firms to secure 66 billion won (55 million dollars) in contracts from government departments.
LG IBM, a PC firm, is a joint venture between IBM Korea and LG Electronics. Winsol sells IBM computer servers.
Those arrested included IBM Korea's executive director Jang Gyeong-Ho, who allegedly took 340 million won for helping Winsol win contracts from public offices through pre-arranged bidding between 2001 and 2003.
In 2001, IBM Korea and LG IBM colluded with other firms to help Winsol win a 2.6 billion won open contract in 2001 for the supply of computers and servers to the ministry of information and communication, prosecutors said.
IBM Korea employs some 2,500 people in South Korea and had registered sales of 855 billion won in 2001. It has won a series of national honours since it installed South Korea's first computer - a transistor-based IBM System 1401 - in 1967.