HP's Russia unit pleads guilty in bribery case

Corrections and clarifications: A previous version of this story and headline misstated the number of Hewlett-Packard subsidiaries that pleaded guilty in federal court to criminal violations of the Foreign Corrupt Practices Act. Only HP Russia pleaded guilty in court. Two other HP subsidiaries in Poland and Mexico admitted to criminal FCPA violations in April in separate agreements with the Justice Department.

Hewlett-Packard's Russia subsidiary pleaded guilty Thursday to paying bribes to foreign officials, concluding the last of a trio of foreign corruption settlements that cost the giant computer company $108 million in criminal and regulatory penalties.

The guilty plea, entered in San Francisco federal court, resolved a long-running government investigation and came after the company and the Justice Department reached a plea agreement in April. HP Russia pleaded guilty to violations of the Foreign Corrupt Practices Act (FCPA) and was sentenced to pay a $58.8 million fine, according to a statement from the office of U.S. Attorney Melinda Haag of the Northern District of California.

The subsidiary admitted its executives bribed Russian government officials to win a large technology agreement with the Office of the Prosecutor General of the Russian Federation, a contract that was announced in 1999, the Justice Department said. Illegal payments to Russian officials continued for more than a decade.

"Hewlett-Packard subsidiaries, co-conspirators or intermediaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous email accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash," said Justice Department Deputy Assistant Attorney General Bruce Swartz in a statement.

In April, the government also announced resolutions with HP subsidiaries in Poland and Mexico over criminal violations of the FCPA.

The government said HP Poland, from 2006 through at least 2010, falsified HP books and circumvented internal controls to cover up a scheme to "corruptly secure and maintain" millions of dollars in contracts with Poland's national police agency.

According to the Justice Department, HP Poland paid more than $600,000 in cash bribes and gifts, travel and entertainment to the the police agency's director of information and communications technology. HP Poland gave the government official bags filled with hundreds of thousands of dollars of cash, provided the official with HP desktop and laptop computers, mobile devices and other products and took the official on a leisure trip to Las Vegas, which included a private tour flight over the Grand Canyon, the Justice Department said..

Hewlett-Packard Mexico's misconduct involved its efforts to win business with Mexico's state-owned oil company known as Pemex. The government said HP agreed to pay $1.4 million as a commission to a consultant with close ties to senior executives of Pemex. HP hid the payments by making the commission payment to a third party, who subsequently paid the consultant. The consultant later paid a Pemex official $125,000, the government said.

The three HP subsidiaries together will pay $76.8 million in criminal penalties and forfeiture, the government said.

In a related FCPA matter, Hewlett-Packard in April agreed to $31.5 million settlement with the Securities and Exchange Commission, which brings the total amount of criminal and regulatory penalties against HP and its subsidiaries to more than $108 million.

When HP and Justice announced their settlement agreement in April, HP said it had cooperated fully with the government's investigation and that the misconduct was limited to a small number of people no longer employed with the company. It had no additional comment Thursday.