U.S. enforcement authorities that have been investigating whether HP employees paid bribes to win deals in Russia and the Commonwealth of Independent States (CIS) have now expanded the scope of their probe to several European countries.
The U.S. Department of Justice and the Securities and Exchange Commission are investigating whether HP employees in Germany, Austria, Serbia, the Netherlands were involved in kickbacks or other improper payments to channel partners, or state owned or private entities, HP said in an SEC filing Wednesday. HP says it's cooperating with the investigating authorities.
The SEC and DOJ in September began investigating whether employees in HP's German subsidiary engaged in bribery, embezzlement and tax evasion related to a $44.5 million contract with the Office of the Prosecutor General of the Russian Federation.
The contract ran from 2001 to 2006 and covered the delivery and installation of an IT network, but U.S. authorities are also looking at other government and quasi-government deals in Russia and the CIS dating back to 2000.
In all of the probes, U.S. authorities are sniffing for violations of the Foreign Corrupt Practices Act (FCPA) which restricts bribery of foreign officials. HP could face fines and civil penalties of up to $500,000 per violation and criminal penalties of up to $2 million per violation.
HP has also dealt with bribery allegations on its home soil. In August, HP reached a settlement in August with the DOJ in a long running investigation into alleged kickbacks paid out by HP to win lucrative government contracts.
In October 2009, HP began requiring all of its 154,000 channel partners worldwide to complete anti-bribery and regulatory compliance training, but the mandatory $120 fee attached to the training irked many partners.
In this week's SEC filing, HP explained the difficulties involved in regulating all of its sales channels.
"We use a variety of distribution methods to sell our products and services, including third-party resellers and distributors and both direct and indirect sales to both enterprise accounts and consumers. Successfully managing the interaction of our direct and indirect channel efforts to reach various potential customer segments for our products and services is a complex process," HP said in the SEC filing.
