HP Pays $108 Million to Resolve Bribery Case

Hewlett-Packard and its subsidiaries in Russia, Poland and Mexico have agreed to pay more than $100 million in criminal and regulatory penalties. The payment is part of a deal to resolve a wide-ranging bribery investigation into the company’s efforts to secure lucrative government contracts in the three countries, the Justice Department announced Wednesday.

Federal authorities said the subsidiaries of the California-based technology company created a “slush fund for bribe payments,” a network of shell companies to launder the money, tracked payments to bribe recipients using phony books, and arranged “covert meetings to hand over bags of cash.”

“This agreement is the result of untangling a global labyrinth of complex financial transactions used by HP to facilitate bribes to foreign officials,” said Richard Weber, chief of the Internal Revenue Service’s Criminal Investigation division, who assisted in the inquiry.

As early as 1999, when the Russian government announced a $100 million plan to automate computer and telecommunications systems in its Office of the Prosecutor General, according to court documents, the HP Russian subsidiary viewed the project as the “golden key” that could provide the company access to up to $150 million in additional business with the government.

“To secure a contract for the first phase of the computer project,” prosecutors said, “HP Russia executives and other employees structured the deal to create a secret slush fund totaling several million dollars, at least part of which was intended for bribes to Russian government officials.

In separate arrangements, according to court documents, HP subsidiaries in Poland and Mexico falsified books to secure contracts in those countries. In Poland, prosecutors alleged that the subsidiary provided $600,000 in cash bribes and gifts to help secure the business.

“The misconduct described in the settlement was limited to a small number of people who are no longer employed by the company,” said John Schultz, HP’s executive vice president and general counsel. “HP fully cooperated with both the Department of Justice and the Securities and Exchange Commission in the investigation of these matters and will continue to provide customers around the world with top quality products and services without interruption.”

(Source: USATODAY)