HP Pays $108 Million to Settle U.S. Bribery Investigation

Hewlett-Packard Co. will pay $108 million to settle charges following an investigation by the U.S. Department of Justice and Securities and Exchange Commission of bribery activities in Poland, Russia and Mexico.

Hewlett-Packard’s Russian unit was charged today in federal court in San Jose, California, with conspiracy and violations of the Foreign Corrupt Practices Act, the Justice Department said in a statement.

HP’s Russian unit will plead guilty to felony violations of the FCPA. Prosecutors entered into a deferred prosecution agreement with the company’s Polish unit regarding contracts with the national police agency and a non-prosecution agreement with its Mexican unit relating to a state-owned petroleum company.

“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,” Deputy Assistant Attorney General Bruce Swartz said in the statement.

Hewlett-Packard also agreed to “undertake certain compliance, reporting and cooperation obligations,” the company said in a statement.

Legal Settlement

“The misconduct described in the settlement was limited to a small number of people who are no longer employed by the company,” John Schultz, executive vice president and general counsel of Hewlett-Packard, said in the statement.

The company had previously disclosed regulatory filings that it was the subject of an investigation by the U.S. under the FCPA for activities in Russia and Poland. The Polish Central Anti-Corruption Bureau was also looking into potential violations by an employee of a Hewlett-Packard Polish subsidiary in connection with public sector transactions.

Hewlett-Packard stock rose less than 1 percent to $32.72 at the close in New York, leaving it up 17 percent this year.

The Russian unit case is U.S. v. ZAO Hewlett-Packard A.O., 14-cr-00201, and the Poland unit case is U.S. v. Hewlett-Packard Polska, SP.ZO.O, 14-cr-00202, U.S. District Court for the Northern District of California (San Jose).

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