According to a statement by Hewlett-Packard filed Thursday with the Securities and Exchange Commission, DoJ has joined German authorities in investigating HP for bribery related to certain European contracts. HP’s 10-Q statement summarizes the status of DoJ’s Foreign Corrupt Practices Act investigation:
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 Chief Public Prosecutor’s Office of the Russian Federation. 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 PPO 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.
The U.S. Department of Justice and the SEC have also been conducting an investigation into the Russia GPO deal and potential violations of the Foreign Corrupt Practices Act (“FCPA”). Under the FCPA, a person or an entity could be subject to fines, civil penalties of up to $500,000 per violation and equitable remedies, including disgorgement and other injunctive relief. In addition, criminal penalties could range from the greater of $2 million per violation or twice the gross pecuniary gain or loss from the violation. The U.S. enforcement authorities have recently requested information from HP relating to certain governmental and quasi-governmental transactions in Russia and in the Commonwealth of Independent States subregion dating back to 2000.
Recent changes in the law could motivate insiders to come forward to confidentially assist the SEC in its investigation. Under the Dodd-Frank Wall Street Reform & Consumer Protection Act — which was passed on July 21st of this year — violations of the Foreign Corrupt Practices Act may result in substantial whistleblower rewards for those who assist the SEC in uncovering foreign bribery and kickback schemes. Whistleblower involvement has proven to be extremely successful in advancing such investigations. As recently as September 6, HP settled a False Claims Act case with DoJ, agreeing to pay $55,000,000 for alleged kickbacks and fraud involving domestic GSA contracts (as much or more than $10,000,000 of the settlement will be paid as a reward to whistleblowers who levied and investigated the allegations).