An administrative proceeding by the Securities and Exchange Commission and a companion criminal case filed by the U. S. Department of Justice were both filed on April 9, 2014 charging Hewlett-Packard and its subsidiaries in Russia, Poland and Mexico with violating the Foreign Corrupt Practices Act (FCPA). Hewlett-Packard consented to the SEC order instituting settled administrative proceedings and, in order to settle actions, Hewlett-Packard and its subsidiaries agreed to pay a total of $108 million in penalties.
According to the SEC and the U. S. Department of Justice, in order to obtain foreign contracts, Hewlett-Packard “subsidiaries, co-conspirators or intermediaries” set up slush funds for bribes, set up a complex web of shell companies and bank accounts for money laundering, used 2 sets of books to track bribes while officially keeping them off official books, and used anonymous e-mail accounts and prepaid mobile phones to communicate and set up covert meetings. From 2000 – 2007, ZAO Hewlett-Packard A.O. (HP Russia) created a slush fund of several million dollars, at least part of which was earmarked for bribing Russian government officials, and did pay $2+ million to Russian government officials through agents and shell companies in order to obtain a lucrative government contract. From 2006 – 2010, Hewlett-Packard Polska, (HP Poland), gave bags filled with hundreds of thousands of dollars and gifts, all totaling $600,000.00+ to a Polish government official to secure a contract with Poland’s national police agency. Finally, to obtain contracts to sell hardware, software and licenses to Pemex, Mexico’s government-owned petroleum company, HP paid $1.41 million “commission” to a third party consultant who reportedly had close ties with Pemex senior executives.
While Hewlett-Packard’s case is the most recent, it is certainly not the largest. In January 2014, for example, the Aluminum Company of America (ALCOA) settled an SEC administrative proceeding and DOJ allegations that the company bribed Bahrainian government officials. In that case, ALCOA subsidiaries paid government officials $110+ million over 20 years in exchange for the right to supply a government-run aluminum producer. Settling the enforcement actions, the aluminum giant agreed to pay $384 million in disgorgement, penalties and forfeitures.
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