HP to pay $108 million over foreign bribery charges

The DOJ and SEC claimed the company bribed foreign officials in Russia, Poland and Mexico

Hewlett-Packard (HP) is a global company, and according to the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC), its bribery extended worldwide as well. And now, the company will pay nine figures to resolve Foreign Corrupt Practices Act (FCPA) allegations.

HP will pay $108 million in fines after the U.S. government alleged bribery in Mexico, Russia and Poland. As part of the deal, HP will pay $74.2 million to settle the DOJ’s probe and $29 million in disgorgement to the SEC, the 10th largest disgorgement of all-time.

In a release, the SEC painted a picture of widespread corruption within the company between 2000 and 2007. In order to secure multibillion dollar Russian contracts, an HP subsidiary created a slush fund and numerous shell companies to funnel money. In Mexico, a company executive directly paid consulting firms tied with government officials to win an IT contract. And in Poland, the company provided a government official with a free trip to Las Vegas and supplied him with bags of cash on multiple occasions.

“Hewlett-Packard lacked the internal controls to stop a pattern of illegal payments to win business in Mexico and Eastern Europe,” said Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA Unit, in a statement. “Companies have a fundamental obligation to ensure that their internal controls are both reasonably designed and appropriately implemented across their entire business operations, and they should take a hard look at the agents conducting business on their behalf.”

Through the terms of the settlement, HP has pled guilty to FCPA violations and has agreed to all of the facts from the government’s investigation. “The misconduct described in the settlement was limited to a small number of people who are no longer employed by the company,” company GC John Schultz said in a press release.

Although HP’s FCPA penalty ranks as one of the highest of all-time, it’s actually not even the single highest penalty this year. That distinction would belong to aluminum giant Alcoa, who paid $384 million over allegations of bribing Bahraini officials earlier this year. After 2013 only saw five FCPA enforcement penalties in total, 2014 already seems to be a bounceback year for the Act’s enforcement.

 

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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