In what’s being called a brazen violation of anti-bribery laws, the Russian subsidiary of Hewlett-Packard last week pleaded guilty to felony violations of the U.S. Foreign Corrupt Practices Act (FCPA) in connection with a bribery scheme to win a lucrative technology contract with the Russian Office of the Prosecutor General, according to a press release from the U.S. Attorney’s Office in Northern California.
H-P Russia executives used a multimillion dollar slush fund, created through a complicated buy-back scheme, to bribe Russian officials in the awarding of a technology contract worth more than €35 million, according to the plea agreement. The H-P Russia subsidiary sold hardware and other technology products to a Russian channel partner, then bought the items back with an €8 million mark-up and another €4.2 million in “services.” Those products were then re-sold to Russia’s Office of the Prosecutor General at the marked-up price. Payments to the intermediary were funneled through shell companies, some with direct ties to government officials, and the slush fund was used to purchase trips, luxury automobiles, pricey jewelry, and other items, the release stated. The subsidiary executives kept two sets of books, one of which included secret spreadsheets detailing categories of bribe recipients, the release said. It also included evidence of side agreements, including a bogus €2.8 million commission to a U.K.-registered shell company, which was linked to a Russian government agency director in charge of managing the technology project, according to the release.
