IBM Cloud Authors: Yeshim Deniz, Elizabeth White, Pat Romanski, Liz McMillan, Stefan Bernbo

Related Topics: @CloudExpo, IBM Cloud, Log Management, Government Cloud

@CloudExpo: Article

HP Under Investigation in Germany & Russia for Bribery

HP's Russian headquarters in Moscow were tossed Wednesday by the investigative arm of the Prosecutor General's Office

HP's Russian headquarters in Moscow were tossed Wednesday by the investigative arm of the Prosecutor General's Office at the request of German authorities according to reports by both Reuters and the Wall Street Journal.

It appears from the story the Journal has managed to piece together that German prosecutors in Dresden are investigating whether HP officials paid about €8 million ($10.9 million) in bribes to win a €35 million contract back in 2003, the Carly Fiorina era already infamous for the way it went about trying to stop boardroom leaks to the press, a case that brought down HP chairman Patricia Dunn and led to a Congressional investigation.

Ironically the deal was with the very Prosecutor General's Office in Russia that searched its offices. And equally ironically the Russian Prosecutor General's Office is charged with criminal prosecutions, including many corruption cases, the Journal says.

Germany reportedly comes into it because the state-of-the-art computer system sold to the Russians moved through a German subsidiary of HP's.

The system was reportedly designed to provide secure communications for prosecutors throughout Russia and included notebooks, workstations and servers.

From what the Journal has managed to find out, the Germans have been investigating for months and following the dollars through what the paper - reading documents submitted to a German court - calls "a network of shell companies and accounts in places including Britain, Austria, Switzerland, the British Virgin Islands, Belize, New Zealand, the Baltic nations of Latvia and Lithuania, and the US states of Delaware and Wyoming."

The Germans are reportedly investigating "allegations of breach of trust, tax evasion and money-laundering and whether money was funneled out of HP accounts to create a slush fund," the Journal says.

The investigators have reportedly yet to figure out who was allegedly bribed. They can't even read the Russian signature on the contract. That's why they're rooting through a reported "3,000 e-mails and thousands of pages of additional evidence" looking for who benefits on either sides of the deal.

The paper notes that the SEC could start a parallel investigation since the Foreign Corrupt Practice Act prohibits US companies from bribing foreign officials.

Or it could if it was informed about what was going on but the news has yet to wend its way into an HP filing with the SEC although, according to what the paper heard from "two people familiar with the investigation," HP has known about the investigation since at least December when it was served with search warrants in both Germany and Switzerland "detailing allegations against 10 [unidentified] suspects."

HP seems to have hinted however. The Journal says its last SEC filing on March 11 "gave a non-specific warning to its investors that ‘in many foreign countries' illegal business practices are ‘common.' Such actions, undertaken ‘in violation of our policies...could have a material adverse effect on our business and reputation.'"

In Germany a company can't face criminal charges, but it can be made to disgorge illicit profits if it benefits from a crime. Bribes used to be tax-deductible in Germany.

HP is giving everybody the same statement: "This is an investigation of alleged conduct that occurred almost seven years ago, largely by employees no longer with HP. We are co-operating fully with the German and Russian authorities and will continue to conduct our own internal investigation."

Coming in on the Journal's tail, the Financial Times said early Thursday that after the December raids in Germany three HP managers were arrested but released on bail. At least two of them have left the company and the six others under investigation are managing directors of the shell companies believed to have funneled the money. It claims nine people are implicated.

The FT says the investigation started when a garden-variety audit of a small firm in Leipzig uncovered suspicious payments.

German tax authorities, on the trail of undeclared income, brought down the CEO of Deutsche Post two years ago for tax evasion.

Editor - We received the following statement from HP on April 15, 9:21 am regarding this subject

HP Statement (attributed to an HP spokesperson):

"This is an investigation of alleged conduct that occurred almost seven years ago, largely by employees no longer with HP.   We are cooperating fully with the German and Russian authorities and will continue to conduct our own internal investigation."

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.

IoT & Smart Cities Stories
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...
Machine learning has taken residence at our cities' cores and now we can finally have "smart cities." Cities are a collection of buildings made to provide the structure and safety necessary for people to function, create and survive. Buildings are a pool of ever-changing performance data from large automated systems such as heating and cooling to the people that live and work within them. Through machine learning, buildings can optimize performance, reduce costs, and improve occupant comfort by ...
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
Poor data quality and analytics drive down business value. In fact, Gartner estimated that the average financial impact of poor data quality on organizations is $9.7 million per year. But bad data is much more than a cost center. By eroding trust in information, analytics and the business decisions based on these, it is a serious impediment to digital transformation.
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.
Digital Transformation and Disruption, Amazon Style - What You Can Learn. Chris Kocher is a co-founder of Grey Heron, a management and strategic marketing consulting firm. He has 25+ years in both strategic and hands-on operating experience helping executives and investors build revenues and shareholder value. He has consulted with over 130 companies on innovating with new business models, product strategies and monetization. Chris has held management positions at HP and Symantec in addition to ...
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
As IoT continues to increase momentum, so does the associated risk. Secure Device Lifecycle Management (DLM) is ranked as one of the most important technology areas of IoT. Driving this trend is the realization that secure support for IoT devices provides companies the ability to deliver high-quality, reliable, secure offerings faster, create new revenue streams, and reduce support costs, all while building a competitive advantage in their markets. In this session, we will use customer use cases...