Officials widen net in HP Russian bribery probe

 

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By Stewart Mitchell

Posted on 10 Sep 2010 at 09:52

A bribery investigation into HP's business in Russia looks set to widen, according to a company filing with the US Securities and Exchange Commission.

The announcement relates to an ongoing investigation by German officials into allegations that Hewlett-Packard ISE, a former German subsidiary of HP, bribed Russia's Chief Public Prosecutor's Office in order to secure a contract worth £30 million.

The latest filing suggests that the net is being thrown wider in the case and may involve other several transactions in the private sector.

The €35 million transaction spanned 2001 to 2006 and was for the delivery and installation of an IT network

“The German Public Prosecutor's Office 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,” the company said in its statement.

“The €35 million transaction, which was referred to as the Russia GPO deal, spanned 2001 to 2006 and was for the delivery and installation of an IT network.

"The German prosecutor has recently requested information on several non-public sector transactions entered into by HP and its subsidiaries on or around 2006 involving one or more persons also involved in the Russia GPO deal.”

According to the filing, the US Department of Justice and the SEC have also been conducting an investigation into the Russian deal over potential violations of the Foreign Corrupt Practices Act.

Under the FCPA, a person or an entity could be subject to fines, civil penalties of up to $500,000 per violation and be asked to stump up money gained through the deal.

In a criminal case, the potential fines mount to $2 million per violation or twice the value of the gain from the transaction in question, whichever is the greater.

It is unclear at this stage what new evidence or accusations have prompted the widening of the investigation, but HP is taking the matter seriously, as listed companies need only tell the SEC about ongoing investigations if they are material for investors.