Computing multinational Hewlett-Packard (HP) is to pay US regulators $108m to settle a corruption scandal involving employees at subsidiaries in three countries, who were charged with bribing government officials to win and retain lucrative public contracts.
The case piles further pressure on the HP boss, Meg Whitman, who is already managing the fallout from her company's disastrous acquisition of the British software group Autonomy, while losing ground commercially to Samsung, Apple and Chinese rival Lenovo.
Corruption was unearthed in relation to contracts worth $40m to install IT equipment at the national police headquarters in Poland, €35m of work for government prosecutors in Russia, and a deal to supply Mexico's state-owned petroleum company.
The investigation has involved regulators in Poland and Germany, the US Department of Justice (DoJ), its Securities and Exchange Commission (SEC), and the FBI. A parallel criminal case has now been announced by the DoJ.
In Poland, prosecutors on Wednesday charged a former HP executive, named in accordance with local law only as Tomasz Z, with handing over cash, computers and audio and video equipment worth more than $600,000 to the head of IT at the country's police headquarters.
Meanwhile the SEC said HP's subsidiary in Russia had also paid more than $2m through agents and various shell companies to a Russian government official to retain a multimillion-dollar contract with the federal prosecutor's office. The corruption is said to have occurred from 2000 to 2007.
In Mexico, as part of a bid to win a software sale to the state petroleum company, an HP subsidiary paid more than $1m in inflated commissions to a consultant with close ties to company officials, and the money, referred to internally as an "influencer fee", is said to have been funnelled to one of those officials.
Kara Brockmeyer, of the SEC enforcement division, said: "Hewlett-Packard lacked the internal controls to stop a pattern of illegal payments to win business in Mexico and Eastern Europe. The company's books and records reflected the payments as legitimate commissions and expenses.
"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."
US regulators have launched a wide-ranging probe into the behaviour of US IT companies abroad. IBM said last year it was under investigation in Poland and four other countries, and the company paid $10m, also in 2013, to settle a corruption case involving China and South Korea. Cisco said last month the company and its resellers in Russia, eastern Europe and central Asia are being investigated.
Poland has been pursuing allegations of corruption against a group of multinational IT companies, covering a period from 2007 to 2009.
The probe is now drawing to a head, with officials saying on Wednesday that 41 people, including IT company executives, government officials and former police officers, had been charged with almost 70 offences.
The interior minister, Bartlomiej Sienkiewicz, took to the radio to hail a "breakthrough moment in Poland when a great international company acknowledges its corrupt activities in Poland".
Under the US's Foreign and Corrupt Practices Act, which makes it illegal to bribe foreign government officials, HP or individuals involved in the case could be subject to penalties of up to $725,000 per violation and the company could be forced to hand back any profits. If found guilty of criminal offences, the penalty could rise to $25m per violation.
John Schultz, an executive vice-president and general counsel at HP, said: "The misconduct described in the settlement was limited to a small number of people who are no longer employed by the company. HP fully cooperated with both the Department of Justice and the Securities and Exchange Commission in the investigation of these matters."
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