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Eric Carlson
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HP probe spreads to Poland, Mexico and beyond

Image courtesy of Hewlett Packard Hewlett Packard said Polish police are investigating some ‘public-sector transactions in Russia, Poland, the Commonwealth of Independent States, and Mexico, among other countries.’

The Polish Central Anti-Corruption Bureau is looking into potential FCPA violations by an employee of Hewlett-Packard Polska Sp. z o.o., HP said in a quarterly SEC filing last week.

Prosecutors in Germany last year arrested four former Hewlett-Packard managers for paying bribes in Russia.

About €7.5 million in bribes went to Russian officials to win computer sales for H-P, the prosecutors said.

H-P disclosed in 2011 that it was under investigation in the U.S. by the DOJ and SEC for potential FCPA violations in a deal to sell computer equipment to the Russian General Prosecutor’s Office.

HP said the ‘€35 million transaction, which was referred to as the Russia GPO deal, spanned the years 2001 to 2006 and was for the delivery and installation of an IT network.’

Russian prosecutors search Hewlett-Packard’s Moscow offices in 2010.

The company hasn’t released details about potential FCPA violations in Mexico.

German prosecutors want HP to be made ‘an associated party’ to the GPO case, the company said. If that happens, HP could be ordered to disgorge profits based on the acts of the indicted former employees.

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Here’s the full FCPA disclosure from Hewlett-Packard Company in its Form 10-Q filed with the SEC on September 9, 2013:

The German Public Prosecutor’s Office (“German PPO”) has been conducting an investigation into allegations that current and former employees of HP engaged in bribery, embezzlement and tax evasion relating to a transaction between Hewlett-Packard ISE GmbH in Germany, a former subsidiary of HP, and the General Prosecutor’s Office of the Russian Federation. The approximately €35 million transaction, which was referred to as the Russia GPO deal, spanned the years 2001 to 2006 and was for the delivery and installation of an IT network. The German PPO has issued an indictment of four individuals, including one current and two former HP employees, on charges including bribery, breach of trust and tax evasion. The German PPO has also asked that HP be made an associated party to the case, and, if the German PPO’s request is granted, HP would participate in any portion of the court proceedings that could ultimately bear on the question of whether HP should be subject to potential disgorgement of profits based on the conduct of the indicted current and former employees.

The U.S. Department of Justice and the SEC have been conducting an investigation into the Russia GPO deal and potential violations of the Foreign Corrupt Practices Act (“FCPA”). The agencies, as well as the Polish Central Anti-Corruption Bureau, are also conducting investigations into potential FCPA violations by an employee of Hewlett-Packard Polska Sp. z o.o., an indirect subsidiary of HP, in connection with certain public sector transactions in Poland. In addition, the agencies are conducting investigations into certain other public-sector transactions in Russia, Poland, the Commonwealth of Independent States, and Mexico, among other countries.

Under the FCPA, a person or an entity could be subject to fines, civil penalties of up to $725,000 per violation and equitable remedies, including disgorgement of profits, pre-judgment interest and other injunctive relief. In addition, criminal penalties could range from the greater of $25 million per violation or twice the gross pecuniary gain or loss from the violation.

HP is cooperating with these investigating agencies.

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Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.

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