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HP Agrees to Settle with DOJ

 

Computer Circuit
On Monday, August 2nd, Hewlett-Packard (HP), the world’s largest technology company based on revenue, agreed to settle with the U.S. Department of Justice (DOJ) for violating federal anti-kickback laws. HP had overcharged the government on numerous federal contracts. HP paid “influencer fees” worth millions of dollars to systems integrators from Accenture PLC who were advised by HP to recommend HP products to the government. “New business opportunity” payments were also available when HP was a subcontractor on government contracts, but the appropriate price deductions were not taken and the U.S. government was overcharged. Additionally HP did not allow for volume pricing, which could have decreased the price of the products.

This case is a continuation of the 2007 case against HP, Sun Microsystems and Accenture PLC, which were accused of violating anti-kickback laws, breaching government contracts, and submitting false claims with inflated fees and illegal rebates. IBM and PricewaterhouseCoopers paid $5.2 million to settle allegations in 2007. The case was brought to the attention of the government by whistleblowers Norman Rille and Neal Roberts.

Due to the settlement, HP’s third quarter fiscal profit is expected to fall 2 cents per share, amounting to around $50 million.

Sources:

Associated Press. “HP reaches settlement with DOJ in kickbacks case.” 2 August 2010. http://www.google.com/hostednews/ap/article/ALeqM5jzU-OV27CbvN6yjK3cBZzBkfAoJwD9HBMUAO0.

Menn, Joseph. “HP settles US government kickback probe.” The Financial Times. 3 August 2010. http://www.ft.com/cms/s/2/251067a0-9e8e-11df-a2a6-00144feab49a.html?ftcamp=rss.

Reuters. “Hewlett-Packard to Settle Kickback Inquiry.” The New York Times. 2 August 2010. http://www.nytimes.com/2010/08/03/technology/03hewlett.html?src=busln.

 
 
 

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