Legal News

Will Probe of HP in RUS, GER, Become FCPA Matter for SEC in US?

By Ashby Jones

The SEC and Justice Department have, in recent years, really ramped up their investigations of U.S. companies suspected of paying bribes to win business overseas. If, five years ago, there was any dust on the law used to prosecute these cases, 1977’s Foreign Corrupt Practices Act, today it’s all been wiped away.

Federal officials might have yet another big case to go after, one involving technology heavyweight Hewlett Packard.

There’s an investigation underway in Germany and Russia, where authorities from both countries are investigating whether Hewlett-Packard Co. executives paid millions of dollars in bribes to win a contract in Russia, according to people familiar with the matter. Click here for the WSJ story.

German prosecutors are looking into the possibility that H-P executives paid about €8 million ($10.9 million) in bribes to win a €35 million contract under which the U.S. company sold computer gear, through a German subsidiary, to the office of the prosecutor general of the Russian Federation. The office handles criminal prosecutions in Russia, including many corruption cases.

Russian investigators raided H-P’s Moscow offices Wednesday in connection with the probe, the people familiar with the matter said. In December, German authorities arrested three suspects, including one current H-P executive and two former company officials, in connection with the case, according to court records. None of the three has been formally charged and all have since been released on bail.

An H-P spokesperson said, “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.”

And will the European probes spur U.S. regulators into action? According to the Journal article, it certainly could. The SEC declined to comment on the matter, however.

German law differs from U.S. law in this material regard: Under German law criminal charges can’t be filed against a corporation such as H-P, only against living people. A court can, however, order the seizure of illicit profits if a corporation is found to be the beneficiary of a crime. At least H-P’s got that going for them.

Full post as published by Law Blog - WSJ.com on April 15, 2010 (boomark / email).