Hewlett-Packard in Palo Alto (Jason Doiy)
SAN FRANCISCO — Hewlett-Packard Co. will pay more than $108 million to resolve allegations that it bribed foreign officials in Russia, Poland and Mexico to win lucrative government contracts.
The Securities and Exchange Commission and the Department of Justice announced sweeping settlements with HP on Wednesday that address alleged violations of the Foreign Corrupt Practices Act in the three countries. As part of the deal, HP’s Russian subsidiary admitted that it paid bribes to land a technology contract with the Russian government and will plead guilty to violating the FCPA. The company’s subsidiaries in Mexico and Poland also admitted wrongdoing in exchange for non-prosecution and deferred prosecution agreements, respectively.
HP will shell out nearly $76.8 million in criminal penalties and forfeiture. The company will also pay almost $31.5 million to settle administrative proceedings brought by the SEC.
“Today’s resolution with HP reinforces the fact that there is no double standard: U.S. businesses must respect the same ethics and compliance standards whether they are selling products to foreign governments or to the United States government,” U.S. Attorney Melinda Haag said in a statement.
Trial attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s fraud section handled the Justice Department’s case with Assistant U.S. Attorney Adam Reeves in the Northern District of California. The SEC investigation was handled by David Berman and Tracy Davis, who work in the agency’s FCPA unit in San Francisco.
Washington, D.C.-based partner F. Joseph Warin and others at Gibson, Dunn & Crutcher served as lead counsel for HP in the investigation and negotiations. Fenwick & West partner Christopher Steskal, chair of the firm’s white collar and regulatory group, also represents the company.
HP General Counsel John Schultz said in a statement that the company cooperated fully with the SEC and DOJ and agreed to implement additional compliance and reporting procedures in the future.
“The misconduct described in the settlement was limited to a small number of people who are no longer employed by the company,” Schultz said.
Documents filed by the DOJ on Wednesday in San Francisco detail nearly a decade of alleged misconduct by HP overseas.
“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,” Deputy Assistant Attorney General Bruce Swartz said in a statement.
In 1999, the Russian government announced that it would automate the infrastructure of the Office of the Prosecutor General, a project worth more than $100 million that HP Russia officials thought could be the “golden key” to up to $150 million in additional work, according to court papers. In pursuit of the contract, HP Russia employees allegedly funneled more than $2 million to a Russian official through agents and shell companies. HP Poland allegedly paid a government official cash bribes and gifts worth more than $600,000 to win technology contracts with the Polish National Police Agency. After setting its sights on contracts with a state-owned petroleum company, HP Mexico allegedly paid $1.41 million in commissions to a consultant, who later handed some of the funds to a government official.
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