Tech multinational Hewlett-Packard (HP) has agreed to pay an almost Sh10 billion fine to a US regulator after admitting its staff have been bribing government officials to win contracts. The computer maker, currently fighting to scoop a Kenyan contract to supply laptops to school, will pay $108 million (Sh9.2 billion) in settlement of a graft scandal. The scam involves employees of the company’s subsidiaries in Mexico, Poland and Russia. The corrupt dealings were exposed through investigations by authorities in Poland and Germany, US Securities and Exchange Commission (SEC) and the Department of Justice through the Federal Bureau of Investigation. The SEC enforcement division was quoted by The Guardian saying “Hewlett-Packard lacked the internal controls to stop a pattern of illegal payments to win business in Mexico and Eastern Europe. The company’s books and records reflected the payments as legitimate commissions and expenses” it said. BEST PRACTICES “Companies have a fundamental obligation to ensure that their internal controls are both reasonably designed and appropriately implemented across their entire business operations, and they should take a hard look at the agents conducting business on their behalf.” In Poland, a former HP employee was found to have dished out cash, computers, audio and video equipment valued at over $600,000 (about Sh52 million) to head of IT department at the national police headquarters. In Russia, the firm’s subsidiary was found guilty of paying a bribe of over $2 million (about Sh172 million) through agents to a senior government official to keep a multi-million dollar contract with the prosecutor’s office. In Mexico, the company was also found to have paid bribes of over $1 million (about Sh86 million) to ‘win’ a contract to supply the software to the state petroleum company. A criminal case is yet to be filed by the Department of Justice. The company said it has fully cooperated with authorities conducting the investigation. “The misconduct described in the settlement was limited to a small number of people, who are no longer employed by the company. HP fully cooperated with both the Department of Justice and the Securities and Exchange Commission in the investigation of these matters,” HP executive vice-president and general counsel John Schultz was quoted saying in The Guardian. The scandal piles more pressure on HP, which has had to deal with increased competition from rivals such as Apple, Samsung and Lenovo. Corruption revelations may affect its perception when tendering for contracts in other markets and further raise questions of integrity in procurements that involve large multinationals with big financial muscle.
Posted on: Mon, 14 Apr 2014 12:05:39 +0000
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