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Entries in Hewlett Parkard (11)

Wednesday
Sep112013

HP probe spreads to Poland, Mexico and beyond

Image courtesy of Hewlett Packard Hewlett Packard said Polish police are investigating some ‘public-sector transactions in Russia, Poland, the Commonwealth of Independent States, and Mexico, among other countries.’

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Thursday
Sep132012

Germany Arrests Former Hewlett-Packard Managers

A report today in Bloomberg's Businessweek said state prosecutors in Germany arrested three former Hewlett-Packard managers for paying bribes in Russia nine years ago.

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Friday
Aug032012

Who Will Crack The Top Ten?

If the cost of Avon's internal investigation is any indication of what's coming, its final deal with the feds is likely to make it onto our top ten list.

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Monday
Jun112012

HP's FCPA Disclosure

Palo Alto-based Hewlett Packard Company's latest Form 10-Q filed with the SEC on June 8 contained this FCPA disclosure:

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Monday
Jul182011

Who'll Make The Next Top Ten?

Our list of the ten biggest corporate FCPA cases of all time hasn't changed since April, when Johnson & Johnson's $70 million settlement came on as number 10.

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Wednesday
Dec292010

The 2011 Watch List

Of the 150 files in the DOJ's hopper, our watch list includes more than half of them.

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Monday
Dec272010

Fox's Favorite Investigations

Last week Tom Fox picked his top ten FCPA enforcement actions for 2010. Today he gives his choices for the top ten investigations disclosed or making news this year:

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Tuesday
Dec212010

H-P, Mark Hurd And The FCPA

Will investigations into H-P's former CEO's domestic conduct converge with ongoing probes into the company's overseas sales practices?

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Friday
Sep102010

China's Clean Up Continues

One of China's top corruption fighters this week was given a suspended death sentence after being convicted of corruption.

Wang Huayuan, 62, was charged with taking bribes while serving as secretary of the provincial commissions for discipline in Guangdong and Zhejiang provinces between 1998 and 2009. The bribes amounted to 7.71 million yuan (about $1.13 million).

He was arrested last year, expelled from the Communist Party, and all of his personal property was confiscated. He was sentenced by the Intermediate People's Court in Shandong.

The official Xinhua News Agency said Wang's death sentence was suspended for two years, which usually results in life in prison.

In return for bribes, the court said, Wang "dispensed favorable treatment that helped others in business, employment, litigation and in avoiding arrest."

His arrest came amid China's biggest anti-corruption campaign, which the government said has resulted in 256,000 arrests.

Wang was one of eight ministerial-level officials investigated during last year's sweep, according to Xinhua. The others included the former vice president of the supreme court, Huang Songyou, who was sentenced on January 19 to life in prison for taking bribes and embezzlement, and the former vice president of the state-owned China Development Bank, Wang Yi, who received a suspended death sentence on April 15 for taking bribes.

In August last year, China executed the former head of Beijing airport's management company. Li Peiying, 62, was convicted of accepting almost $4 million in bribes and embezzling about $12 million in public money since 1995. He headed Capital Airports Holding Co., the operator of more than 30 airports in nine provinces with 38,000 employees.

Earlier this year, China's Ministry of Commerce said that over the past three decades, about 4,000 corrupt officials had fled to Canada, the United States, Australia, and other countries, taking with them more than $50 billion in China's public funds.

*     *     *

Hewlett-Packard's Troubles. HP's disclosure in its latest 10-Q indicates the investigation into possible corruption overseas is spreading.

It said:

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.

HP is cooperating with these investigating agencies.

Wednesday
Jul142010

A Failure To Escalate

By Thomas Fox

At the recent Corporate Counsel Institute – Europe put on by the Georgetown University Law CLE program in London, participant Matthew King, Group Head of Internal Audit at HSBC, was interviewed by Project Counsel founder Gregory  Bufithis. They talked about the most important elements of a successful compliance program. Mr. King said the one key feature is “escalation.

He meant that in almost every compliance issue he's been involved with, there was a point when an employee did not report a sensitive payment or situation up the ladder for additional review. Because the issue never reached the right people in the company for review, action, and resolution, it later became more difficult and more expensive to deal with.

Culture, Mr. King emphasized, has to be in place, not only to allow escalation but to actively encourage it. And while whistleblower hotlines are necessary, these should not be viewed as the only way for an employee to escalate a concern.

The HP matter, which I wrote about previously in this space, is an example of a failure of escalate. It involves HP's German subsidiary and allegations of bribery connected with a contract for the sale of hardware into Russia. The Wall Street Journal reported that at least one witness said the transactions in question were internally approved by HP through its then-existing contract approval process.

Mr. Dieter Brunner, a bookkeeper who is a witness in the probe, said in an interview he was surprised when, as a temporary employee of HP, he first saw an invoice from an agent in 2004.

"It didn't make sense" because there was no apparent reason for HP to pay such big sums to accounts controlled by small businesses, Mr. Brunner said. But he processed the transactions anyway because he was the most junior employee handling the file. “I assumed the deal was OK," he said, "because senior officials also signed off on the paperwork."

Think how different HP's situation might be today if this temporary employee had escalated his concern.

So is your company encouraging its employees to escalate their compliance concerns? Or does everyone simply approve a payment or transaction because others have already done so?

The YouTube video of Gregory P. Bufithis' interview of Matthew King is here.

Thomas Fox is an attorney in Houston, Texas, specializing in FCPA compliance, risk management and international transactions. His blog can be found here and he can be reached at tfox@tfoxlaw.com.

Wednesday
May052010

HP's Disclosure Mystery

By Thomas Fox

Thanks to the FCPA Blog for its post Avon: A Pound of Cure. As you said, Avon voluntarily disclosed to the DOJ and SEC its discovery of potential FCPA violations and the on-going internal investigations. I looked into the public record and found that Avon first learned of these allegations via an internal company whistleblower in June 2008. I also discovered that the company made such disclosures as early as October 2008 in an SEC filing and also in its 2008 and 2009 Annual Reports.

 

Avon's approach contrasts with Hewlett-Packard's, another company recently making FCPA news. HP apparently first learned of a bribery and corruption investigation when it was served with document requests by German authorities in December 2009 -- around the same time that three former and current HP employees were arrested by the same German authorities for allegedly paying bribes to make sales in Russia. As reported by the Wall Street Journal, HP did not report this investigation to the DOJ and SEC until April 2010 and still has not made any public record filing on this bribery and corruption investigation.

 

The Box Score on these timings appears to be:

 

Notifications

Avon

HP

Initially Notified

June 2008

December 2009

How Notified

Company Whistleblower

Arrests of current/former employees, subpoena for documents

Self-Reported the DOJ/SEC

June 2008

April 2010

First reported in SEC Filing

October 2008

None found

 

One of the clear rules from the U.S. Federal Sentencing Guidelines is that self reporting may qualify a corporation for amnesty or reduced sanctions. I wondered if these differences in approaches in self reporting (or not as the case may be) could lead to higher penalties, monetary or otherwise to HP?

 

There are two other curious notes regarding HP.

 

In both its 2008 and 2009 Annual Reports, the company made the following statement: “In many foreign countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by laws and regulations applicable to us, such as the Foreign Corrupt Practices Act. Although we implement policies and procedures designed to facilitate compliance with these laws, our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any such violation, even if prohibited by our policies, could have a material adverse effect on our business.” Could this be the SEC-required admission of an on-going FCPA investigation?

 

And in October 2009, HP ordered (via fax transmission) its 155,000 channel operation partners to take an FCPA compliance training course, and pay to do so. Such training was required in a very short time frame or the channel operations partners risked losing their status with HP. Did HP order the training because an unreported and undisclosed FCPA investigation was ongoing?

 

I'd be interested to hear what others think.

 

Thomas Fox is an attorney in Houston, Texas, specializing in FCPA compliance, risk management and international transactions. His blog can be found here and he can be reached at tfox@tfoxlaw.com.