Hewlett-Packard has admitted to creating and using slush funds for bribes, money laundering, and clandestine “bag of cash” handoffs in order to profiteer off of lucrative government contracts in Russia, Poland, and Mexico, according to court documents.
HP’s guilty plea carries with it a $108 million penalty — a combination of SEC penalties, as well as criminal fines and forfeitures paid out to the Department of Justice. Thus far no criminal charges have been brought against American HP executives. The multi-agency investigation, which was conducted by multi-national law enforcement partners, the FBI, IRS, and SEC, has revealed kleptocracies in the three foreign governments and corruption and dishonesty among HP corporate fat cats.
“This agreement is the result of untangling a global labyrinth of complex financial transactions used by HP to facilitate bribes to foreign officials,” said IRS-CI Chief Richard Weber.
HP has since fired the “small number” of corporate big shots who were involved in the plot, according to HP general counsel John Shultz, who noted that the company “cooperated fully” with the various investigating agencies — a fact corroborated by court documents. A Department of Justice spokeswoman called HP’s cooperation “extensive.”
Beginning in the late 1990s, HP’s Russian conspirators concocted a sophisticated scheme to bypass internal controls and falsify records in order to siphon cash into a secret slush fund — eventually totaling about $10 million. Partly used for bribes and kickbacks to Russian officials, the money was aimed principally to grease the wheels for an approximately $48 million technology contract that HP ultimately won. The vast majority of that cash was laundered through off-shore bank accounts and ultimately deposited into shell accounts, some directly held by Russian officials.
Evidently, the bribed Russian officials used the laundered money to fund lavish travel expenses (one hotel bill totaled nearly $150,000), jewelry, cars, and numerous other luxury goods.
In Poland, HP’s conduct was much the same, circumventing internal controls within the corporate structure in order to bribe a senior official — Andrzej M., according to Reuters — within the Komenda G?ówna Policji, the Polish national police. In this case HP executives took the senior executives on a sumptuous trip to the US that included stops in San Francisco and Las Vegas and a private flight over the Grand Canyon, much of which was paid for in cash by HP. Shortly after the trip Andrzej M. allegedly signed technology contracts worth about $32 million, in the spring of 2007.
Between 2007 and 2010, HP executives met with the Polish official on numerous occasions, each time delivering “bags filled with cash,” ranging from $30,000 to $360,000 each, as well as gifts— all totaling some $600,000.
HP’s Mexican bribes aimed at ensuring that the company’s suite of “business technology software, hardware, and licenses” products got sold for about $6 million to the state-owned oil company Petroleos Mexicanos, or Pemex. HP executives used an unnamed Mexican consulting firm with close ties to Pemex executives to funnel money via a third party, through the consulting firm, and into the pockets of the Pemex executive. The bribes totaled about $125,000. The consulting firm also earned about $2 million in “commissions.”
An HP spokeswoman declined to comment on possible further criminal prosecution of past and present HP employees or to specify the number of HP executives involved in the criminal conspiracy.
The Polish government has elected to charge several individuals — both from HP and the government — in criminal cases in an investigation related to the guilty plea from HP, according to Reuters.
Thus far there is no word on related criminal charges in Mexico or Russia.