US fraud case costs HP $55m

Dylan Bushell-Embling | August 31, 2010

telecomseurope.net

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HP has agreed to pay $55 million (€43.3 million) to settle a US Department of Justice (DoJ) investigation into allegations of fraud and kickbacks.

The agreement, announced yesterday, brings the curtain down on an eight year investigation into allegations that HP bribed systems integrators to recommend its kit to the US government, and of providing incomplete information to the General Services Administration.

“Contractors must deal fairly with the government when doing business with federal agencies,” Tony West, a DoJ assistant attorney general stated.

“As this case demonstrates, we will take action against those who seek to taint the government procurement process with illegal kickbacks.”

The investigation was prompted by a whistleblower lawsuit in 2004.

HP had been required in 2002 to provide the GSA with data on its operations which the agency later used as a benchmark for negotiate prices for government customers.

But HP told the GSA in 2007 that it might not have fully complied with the disclosure provisions. After an audit by the GSA's inspector general, the contract was deemed to be defectively priced.

HP agreed a settlement in principle earlier this month, stating that it would likely impact earnings by 2 cents per share during fiscal 3Q, which ran to end-July.

It denied engaging in any illegal conduct, and said it had agreed to the settlement without any admission of wrongdoing.

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telecomseurope.net

Dylan Bushell-Embling

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