Boston, MA, 04/14/2014 (usastockreport) – Hewlett-Packard Company (NYSE:HPQ) paid heavily for compliance breach at its Russian subsidiary as executives of the Russian subsidiary were able to subvert the company’s compliance staff and guidelines. In what could at best be defined as a bold move, a few staff at the Russian subsidiary fooled the company’s compliance staff as they were able to channel millions of dollars as bribe payments to Russian government officials, who are yet to be either identified or named in public. Thus, demonstrating that even the strongest of compliance measures can be hoodwinked.
The Palo Alto, computer hardware giant, agreed to settle two bribery related cases involving investigations of its action through offices in Mexico, Poland and Russia by paying $108 million. As part of the terms of the settlement, the company’s Russia unit admitted under oath to paying Russian officials millions of US dollars to secure contract to upgrade computer systems at the Prosecutor General’s office.
To influence the deal, worth more than $100 million, Hewlett-Packard Company (NYSE:HPQ)’s Russia executives bypassed policies and controls. For example, in a deal for automating the Russian Prosecutor General’s office the financing was to be done via the German government and hence would have required the company’s German unit to provide the necessary authorization. To avoid closer scrutiny, certain executives of the Russian subsidiary signed the contract themselves.
To subvert investigation activities, the bribes were channeled through shell companies and phony contractors located around the world by Russian officials.
Prosecutors in the case noted that while Hewlett-Packard Company (NYSE:HPQ) had a compliance program designed to prevent bribes, its controls were not sufficiently stringent enough to detect and prevent any misconduct and that the subsidiaries sometimes have demonstrated abilities to circumvent or disregarded the policies in its entirety. The Hardware giant’s Russia unit pleaded guilty to bribery charges this Wednesday.