[Rails] Active Record and IBM_DB

I am attempting to connect to an iseries running V54R. When I run a test
in IRB it does not work:
test is from (https://github.com/on-site/ibm_db)

irb(main):001:0> gem 'ibm_db'
=> true
irb(main):002:0> require 'mswin32/ibm_db'
=> true
irb(main):003:0> IBM_DB.connect 'sample', 'db2admin', 'secret'
ArgumentError: uncaught throw :"Allocation of environment handle failed:
<error message could not be retrieved>"
from (irb):3:in `connect'
from (irb):3
from c:/Ruby192/bin/irb:12:in `<main>'
irb(main):004:0>

the gem list command gives the following output

*** LOCAL GEMS ***

activerecord (3.2.13, 3.2.12, 3.2.8, 3.2.8.rc2, 3.2.6, 1.15.6)
ibm_db (2.5.11 x86-mingw32)

I have installed the DB2 drivers on my Windows 7 64bit PC. I also have
the following in my path
C:\PROGRA~2\IBM\SQLLIB\BIN;

Any idea what I can check here?

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