HP settles probe into contract kickbacks

Computer maker announces agreement with Justice Department over alleged kickbacks paid to help secure government contracts.

Hewlett-Packard announced Monday it has reached an agreement with the U.S. Justice Department over alleged kickbacks paid by vendors to help secure government contracts.

The agreement resolves the department's three-year investigation into HP's GSA Multiple Award Schedule contract, as well as a civil suit filed in Arkansas in 2007. HP said the settlement would have a negative impact of two cents per share on its fiscal third quarter but did not did not update its guidance for the year or quarter.

The computer maker denied the allegations and said it settled the probe without admitting wrongdoing.

"HP denies engaging in any illegal conduct in connection with these matters," the company said in a statement announcing the settlement. "HP has agreed to a settlement with the Department of Justice, without any admission of wrongdoing, in order to resolve the allegations in full."

The Justice Department announced in 2007 it had joined an investigation over whether HP, Sun Microsystems, and Accenture paid millions of dollars in unlawful kickbacks in federal purchases. The Justice Department's complaint alleged that the companies used affiliate relationships "to enrich themselves through a kickback scheme" in violation of the False Claims Act.

The agreement also settles a civil complaint filed in 2004 under the whistleblower provisions of the False Claims Act by Norman Rille, who was then a senior manager with Accenture, and Neal Roberts, a partner at PricewaterhouseCoopers.

The settlement still requires court approval, as well as from the Justice Department and other agencies, HP said.

 

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