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The DOJ announced yesterday that Hewlett-Packard has agreed to pay more than $108 million to settle the SEC’s charges and a parallel criminal case by the U.S. Department of Justice.  The SEC charged Hewlett-Packard with violating the Foreign Corrupt Practices Act ("FCPA") when its subsidiaries in three different countries made improper payments to government officials to obtain or retain lucrative public contracts.


According to the SEC's press release, the SEC’s order instituting settled administrative proceedings finds that HP's subsidiary in Russia paid more than $2 million from 2000 to 2007 through agents and various shell companies to a Russian government official to retain a multi-million dollar contract with the federal prosecutor’s office.  In Poland, Hewlett-Packard’s subsidiary provided gifts and cash bribes from 2006 to 2010 worth more than $600,000 to a Polish government official to obtain contracts with the national police agency.  And as part of its bid to win a software sale to Mexico’s state-owned petroleum company, Hewlett-Packard’s subsidiary in Mexico paid more than $1 million in inflated commissions to a consultant with close ties to company officials, and money was funneled to one of those officials.


“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,” said Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA Unit.  “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.”


The SEC press release states that Hewlett-Packard consented to the SEC’s order, which finds that it violated the internal controls and books and records provisions of the Securities Exchange Act of 1934.  The company agreed to pay $29 million in disgorgement (approximately $26.47 million to the SEC and $2.53 million to satisfy an IRS forfeiture as part of the criminal matter).  Hewlett-Packard also agreed to pay prejudgment interest of $5 million to the SEC and fines totaling $74.2 million in the criminal case for a total of more than $108 million in disgorgement and penalties.