Hewlett-Packard Defends Ex-CEO Fiorina in Probe

Hewlett-Packard Co., facing a European bribery probe over a 2003 computer contract, said former Chief Executive Officer Carly Fiorina is being unfairly criticized for being in charge during that time.

“To suggest that Carly Fiorina, or any other senior executive in Palo Alto then or now, was knowledgeable of these alleged activities is wrong and not supported by the facts,” David Shane, a company spokesman, said in an interview. “The facts have clearly demonstrated that the criminal investigation is focused on alleged activities that took place seven years ago in Germany and Russia by regional employees.”

Prosecutors in Germany are investigating possible corruption linked to the Palo Alto, California-based company’s 35 million-euro ($47.3 million) sale of computers to Russia when Fiorina was CEO. They are examining whether Hewlett-Packard paid bribes to win the contract, Wolfgang Klein, a spokesman at Saxony’s Chief Prosecutor’s Office, said this week.

Hewlett-Packard, the world’s biggest maker of personal computers, hired law firm Linklaters LLP in December 2009 to help with its internal investigation, Shane said. PricewaterhouseCoopers LLP is assisting Linklaters. The company said the computer contract in question was signed and approved seven years ago.

Opponents’ Criticism

Fiorina, currently a Republican candidate for the U.S. Senate in California, was the first outsider to serve as CEO of Hewlett-Packard when she was hired in 1999. She left the company in 2005.

Tom Campbell and Chuck DeVore, Fiorina’s rivals in the senate race, have criticized their opponent, saying she should have been aware of what was happening during her time at Hewlett-Packard.

Fiorina had “a chance to say, ‘Stop, this isn’t right.’ She had a chance to set a tone at the top,” Campbell said in a statement.

Hewlett-Packard’s defense of Fiorina doesn’t resolve questions about her accountability, said Josh Trevino, a spokesman for DeVore, a state assemblyman from Orange County.

“The question is for Carly, ‘Where did the buck stop?’” Trevino said. “Either she was the hard-charging, savvy micromanaging CEO she claims she was, or she was something less than that. But either way, she does bear responsibility for what happened under her watch, and she needs to take it.”

‘Political Attacks’

Julie Soderlund, a spokeswoman for Fiorina, said she was glad that Hewlett-Packard laid out the facts of the case.

“It is unfortunate that Tom Campbell and Chuck DeVore have launched shameless and disgraceful political attacks on this issue,” Soderlund said.

A special unit in Germany is probing nine people for breach of trust, Klein said, adding that the suspects may have set up a system of sham companies and contracts, leading to 8 million euros ($10.8 million) in improper payments, he said.

The investigation was started last year after German tax authorities routinely reviewed the books of a small company in the East German state of Saxony, Klein said. The tax investigators found that no real use could be established for some payments found in the accounts, he said.

Russian authorities and the U.S. Securities and Exchange Commission are also investigating. Hewlett-Packard said it’s cooperating with authorities in all three countries. The Justice Department has a probe as well, according to a person familiar with the matter.

Hewlett-Packard fell 48 cents to $53.75 yesterday on the New York Stock Exchange. The shares have gained 4.3 percent this year.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

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