[JURIST] The US Securities and Exchange Commission (SEC) [official website] on Wednesday charged Hewlett-Packard (HP) [corporate website] with violating the Foreign Corrupt Practices Act (FCPA) [text, PDF] by making improper payments [press release] to various government officials in order to obtain or keep contracts within certain countries. The US Department of Justice (DOJ) [official website] also announced [press release] on Wednesday that it had filed parallel criminal charges against HP in the US District Court for the Northern District of California [official website]. An order [text, PDF] by the SEC, which instituted settled administrative proceedings, stated that HP's Russian subsidiary gave a Russian government official over $2 million in the years between 2000 and 2007 in order to retain a valuable contract with the federal prosecutor's office. The order further alleges similar illegal payments made to officials in Poland and Mexico. Kara Brockmeyer, chief of the SEC Enforcement Division's FCPA Unit, stated:
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. 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.HP has agreed to pay $108 million in order to settle charges by the SEC and DOJ.
In July 2008 a former vice president for HP pleaded guilty [JURIST report] to one count of theft of trade secrets for giving HP protected information he obtained while working for IBM. In October 2007 HP subsidiary Mercury Interactive settled [JURIST report] derivative lawsuits regarding the alleged backdating of stock options. Earlier, in March, a California judge dismissed felony charges [JURIST report] against four defendants who pleaded guilty to misdemeanors in the HP pretexting scandal.