Hewlett-Packard Company Subsidiary Pleads Guilty To Bribery

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U.S. District Judge Lowell Jensen levied the fines as part of $108 million in criminal and civil penalties announced by the the U.S. Justice Department in April of this year. ZAO Hewlett-Packard A.O. or HP Russia pleaded guilty to four counts of violating the U.S. Foreign Corrupt Practices Act.

The FCPA has teeth

The Foreign Corrupt Practices Act makes it a crime to bribe foreign officials in order to obtain contracts for the company. The act also requires transparency in accounting practices and controls to discourage bribery, something that many foreign governments doing business overseas to not hold themselves to as strictly as the States does. In the plea agreement, HP Russia detailed how it set up a multimillion dollar slush fund in order to secure a contact with the Russian prosecutor general’s office valued at around $45 million.

Hewlett-Packard Polska (Poland) was found to have violated accounting practices in April and agreed to pay a fine of $15.5 million. Hewlett-Parkard Mexico also admitted to violating accounting practices and agreed to an out-of-court settlement of $2.5 million.

The total reached $108 million all told after Hewlett-Packard agreed to pay $31.5 million in a civil proceeding begun by the U.S. Securities and Exchange Commission over violations of the U.S. Foreign Corrupt Practices Act.

In a statement today, Hewlett-Packard Company (NYSE:HPQ) was chastised by Principal Deputy Assistant U.S. Attorney General Marshall Miller said, “In a brazen violation of the FCPA, Hewlett-Packard’s Russia subsidiary used millions of dollars in bribes from a secret slush fund to secure a lucrative government contract.

“Even more troubling was that the government contract up for sale was with Russia’s top prosecutor’s office,” Miller said.

Hewlett-Packard’s April statement

HP was unwilling to comment on the case today but rather pointed out a statement made in April by company General Counsel John Schultz.

In the statement drafted in April,  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,” Schultz said.

For all intents and purposes and after over $100 million in fines the case closes an ugly chapter for Hewlett-Packard Company (NYSE:HPQ) and its subsidiaries.

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