Hewlett-Packard Company (NYSE:HPQ) agreed to pay $108 million to settle the criminal and civil charges filed against it by the United States Department of Justice (DOJ), and the Securities and Exchange Commission (SEC) on allegations that its subsidiaries in Mexico, Russia, and Poland committed bribery.
Bribery activities
The SEC found that the subsidiary of Hewlett-Packard Company (NYSE:HPQ) in Russia paid $2 million to make sure that it wouldl keep its contract with the federal prosecutor’s office in the country.
On the other hand, the subsidiary of Hewlett-Packard Company (NYSE:HPQ) in Mexico paid $1 million to lock-in the sale of its software to a state-owned company in the country while its subsidiary in Poland spent $600,000 in gifts and bribes to secure contracts with the national police agency.
According to the SEC, the bribery activities of the subsidiaries of the PC maker went on for years. The regulator also found that the internal controls of Hewlett-Packard Company (NYSE:HPQ) were too slack to prevent illegal payments.
The DOJ said the company violated the Foreign Corrupt Practices Act (FCPA).
Settlement details
HP’s Russian subsidiary pleaded guilty to felony violations of the law. A deferred prosecution agreement was entered by the prosecutors with the company’s subsidiary in Poland and a non-prosecution agreement with HP’s Mexican unit.
In addition, Hewlett-Packard Company (NYSE:HPQ) agreed to “undertake certain compliance, reporting and cooperation obligations.”
In a statement, John Schultz, executive vice president and general counsel of Hewlett-Packard Company (NYSE:HPQ) 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.”
Meanwhile, Deputy Assistant Attorney General Bruce Swartz said “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 e-mail accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash.”
