HP fined $115 million in international bribery case

HP will pay more than AU$115 million in fines and its Russian subsidiary will plead guilty to bribing government officials, following an investigation involving US law enforcement.

HP Russia has agreed to plead guilty to felony violations of the US's Foreign Corrupt Practices Act (FCPA) and admit its role in bribing Russian government officials to secure a contract with the Office of the Prosecutor General of the Russian Federation.

According to the Justice Department, HP Russia is charged with "conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA".

The department is also entering into criminal resolutions with HP Poland relating to contracts with that country's national police agency, and HP Mexico relating to contracts with that country's state-owned petroleum company.

"Pursuant to a deferred prosecution agreement, the department filed a criminal information charging [HP Poland] with violating the accounting provisions of the FCPA. [HP Mexico] has entered into a non-prosecution agreement with the government pursuant to which it will forfeit proceeds and admit and accept responsibility for its misconduct as set forth in the statement of facts," the Justice Department said.

The three HP subsidiaries will together pay almost AU$82 million (US$77 million) in criminal penalties and forfeiture.

On top of that, HP itself agreed to pay more than AU$33 million (US$31 million) in disgorgement, prejudgment interest and civil penalties, bringing the total paid by HP and its subsidiaries to more than AU$115 million (US$108 million).

“Hewlett-Packard subsidiaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous email accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash,” said the Justice Department's Deputy Assistant Attorney General Swartz.

"Even as the tradecraft of corruption becomes more sophisticated, the department is staying a step ahead of those who choose to violate our laws, thanks to the diligent efforts of US prosecutors and agents and our colleagues at the SEC, as well as the tremendous cooperation of our law enforcement partners in Germany, Poland and Mexico."

The Justice Department noted that court filings "acknowledge HP Co.'s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department".

"Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees, and enhancing HP Co.’s internal accounting, reporting, and compliance functions."

In a terse statement on its website, HP's executive vice president and general counsel, John Schultz, said: "The misconduct described in the settlement was limited to a small number of people who are no longer employed by the company. 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."