HP probed over Russian bribery allegations

Hewlett-Packard is facing investigations from authorities in Germany and Russia over allegations that the world’s largest IT firm paid millions of dollars in bribes to win a major contract.

Sources familiar with the matter told the Wall Street Journal that authorities raided HP’s Moscow office on Wednesday to investigate allegations that the US company paid bribes totalling $10.9 million to land a $47.5 million IT contract back in 2003.

Under the deal, HP is reported to have provided a ‘state-of-the-art’ secure communications systems and hardware including notebooks, servers and workstations, to – ironically – Russian prosecutors via a Germany subsidiary.

HP confirmed that the probe was taking place. "This is an investigation of alleged conduct that occurred almost seven years ago, largely by employees no longer with HP," a company spokesperson said. "We are cooperating fully with the German and Russian authorities and will continue to conduct our own internal investigation."

According to the WSJ, HP learned of the investigations in December 2009 when authorities in Germany and Switzerland provided the company with search warrants listing allegations against ten individuals.

A spokesperson at the prosecutor’s office in Dresden told the newspaper that authorities were also investigating HP over allegations of tax evasion, money laundering and breach of trust, as well as whether money had been channeled out of HP accounts and through a complicated network of foreign shell accounts to a slush fund.

HP has endured a rocky 2010 thus far. In January, the company’s HP Enterprise Services division – formerly EDS – lost its protracted legal battle with broadcaster BSkyB over a failed CRM project. The company has also endured industrial action in the UK and allegations of selling defective laptops to the Chinese market.

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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