Hewlett-Packard fined $108 million in bribery cases

Hewlett-Packard will pay $108 million in criminal fines and civil penalties for bribing officials in Russia, Poland and Mexico to win technology contracts, the Justice Department announced Wednesday.

The company's Russian subsidiary, ZAO Hewlett-Packard, has agreed to plead guilty in federal court in San Jose to felony charges of violating the Foreign Corrupt Practices Act, the Justice Department said. It said it settled criminal cases against HP's Polish and Mexican subsidiaries for financial penalties without requiring guilty pleas.

HP admitted paying more than $2 million through multiple shell companies, laundered through offshore bank accounts, into a fund for Russian officials from 2000 to 2007 in order to win the first phase of a $100 million-plus contract with the state prosecutor's office, the Justice Department said.

Quoting a joint statement of facts, the department said the company's Polish subsidiary paid more than $600,000 in cash bribes and gifts, travel and entertainment to the director of Poland's national police agency from 2006 to 2010 to win multimillion-dollar contracts.

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In Mexico, the Justice Department said, HP's subsidiary paid $1.41 million to a consultant with close ties to officials of Pemex, the state-owned oil company, to smooth the path to a $6 million information technology contract.

"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," Bruce Swartz, a deputy assistant U.S. attorney general, said in a statement.

U.S. Attorney Melinda Haag of San Francisco, whose office took part in the case, said it demonstrates that "there is no double standard: U.S. businesses must respect the same ethics and compliance standards whether they are selling products to foreign governments or to the United States government."

The payments consist of $76.7 million in criminal fines and forfeitures from the three subsidiaries and $31.4 million in repayments and civil penalties from the parent company to settle a suit by the Securities and Exchange Commission, the Justice Department said.

The department said Hewlett-Packard had cooperated with the investigation, conducted a "robust internal investigation," disciplined employees and taken remedial measures. The Palo Alto company emphasized those points in its own statement.

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