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HP pays $108M to settle US probes into foreign bribes

The tech giant's subsidiaries in Russia, Poland, and Mexico paid bribes to officials to secure lucrative government contracts, federal investigators allege.


Hewlett-Packard has agreed to pay a $108 million fine to settle charges that three of its foreign subsidiaries bribed officials to secure lucrative government contracts, the company and federal investigators announced Wednesday.

The deal settles parallel investigations by the Securities and Exchange Commission and Justice Department into allegations that payments made to officials in Russia, Poland, and Mexico have violated the Foreign Corrupt Practices Act.

A Justice Department statement accused the tech giant's subsidiaries of creating a "slush fund for bribe payments," setting up an "intricate web of shell companies and bank accounts to launder money," and using "anonymous email accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash."

The SEC said HP's subsidiaries in Russia paid more than $2 million to retain a multimillion dollar contract with the federal prosecutor's office. To win a software contract with a Mexico petroleum company, the HP subsidiary in that country paid more than $1 million in inflated commissions, while agents in Poland paid more than $600,000 to secure contracts with the national police agency.

The statement noted HP's "extensive cooperation" with the investigations, including voluntarily making employees of its US and foreign operations available for interviews and assisting in the collection, organization, and analysis of "voluminous evidence" for investigators.

In addition to the fine, HP has also agreed to certain reporting and compliance obligations, although those measures were not described.

"The misconduct described in the settlement was limited to a small number of people who are no longer employed by the company," John Schultz, HP's executive vice president and general counsel, said in a statement.

The investigation was initially launched in 2010 by officials in Germany and Russia and soon joined by the DOJ and SEC. HP first learned of the probe in December 2009 when it was served with a series of search warrants.

HP's stock rose 0.83 percent, or 27 cents, to $32.72 on Wednesday.