Enforcement Action

 

Docket or Case Number:    14-cr-00202

Court:    N.D. California

Initiation Date:    04/09/2014  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Melinda Haag, United States Attorney
  • Adam A. Reeves, Assistant United States Attorney
  • Jeffrey H. Knox, Chief, Fraud Section, Criminal Division
  • Ryan Rohlfsen, Trial Attorney, Fraud Section, Criminal Division
  • Jason Linder, Trial Attorney, Fraud Section, Criminal Division

Assisting Agencies:    Polish Anti-Corruption Bureau , Polish Appellate Prosecutor’s Office

Type of Action:    DOJ Criminal Proceeding

Origin of the Proceeding:    Foreign investigation

Whistleblower:    Unknown

Case Status:    Resolved


Summary

Hewlett-Packard Polska, Sp. z o.o. ("HP Poland"), was a wholly owned subsidiary of Hewlett-Packard Company ("HP Co.") operating and incorporated in Poland. HP Poland managed most of HP's activities in Poland, and had more than 200 employees during the relevant period. HP Co. was a technology company headquartered in Palo Alto, California, and was a global provider of personal computing devices, information technology infrastructure, and imaging and printing products and services. Komenda Glowna Policji ("KGP") was the Polish National Police agency, headquartered in Warsaw, Poland. From 2006 through at least 2010, KGP was part of the Polish Ministry of the Interior and Administration ("Interior Ministry").

According to the criminal information, from 2006 to 2010, HP Poland provided more than USD $600,000 in cash and gifts to a Polish Official in exchange for government contracts with the the national police agency and the Interior Ministry. Payments were made through its public sector sales manager for contracts to secure and maintain millions of dollars in technology contracts with the Polish government.

On April 9, 2014, the DOJ filed an information against HP Poland, charging the company with violating the internal controls provisions and aiding and abetting violations of the books and records provisions of the FCPA. At the same time, HP Poland entered into a deferred prosecution agreement with the DOJ, agreeing to pay a monetary penalty of $15,450,224.

In a related action, HP Co. consented to the entry of an administrative cease and desist order. HP Co. was oredered to cease and desist from violating the internal controls and books and records provisions of the FCPA. HP Co. agreed to pay disgorgement of $29,000,000 and prejudgment interest of $5,000,000. $2,527,750 of HP Co.'s disgorgement obligation will be satisfied by HP Co.'s payment of $2,527,750 in forfeiture as part of HP Mexico’s non-prosecution agreement with the DOJ.

Country(ies) involved:    Poland

Sanction to Bribe Ratio:    $15,450,224 / $600,000 = 2575.04 %

Sanction to Revenue Ratio:    $15,450,224 / $60,000,000 = 25.75 %

Sanction to Profit Ratio:    N/A

Number of Related Enforcement Actions (Including This Enforcement Action):    4

Country(ies) involved:    Mexico, Poland, Russia

Total $ Bribery Payments:    $14,510,000

Total $ Revenue Generated from Bribery:    $104,533,989

Total $ Profit Earned or Expenses Avoided from Bribery:    $29,000,000

Total $ Monetary Sanctions:    $110,751,824

Sanction to Bribe Ratio:    $110,751,824 / $14,510,000 = (763.28 %)

Sanction to Revenue Ratio:    $110,751,824 / $104,533,989 = (105.95 %)

Sanction to Profit Ratio:    $110,751,824 / $29,000,000 = (381.90 %)

Name:    Hewlett-Packard Polska, SP. Z O.O.

Place of Incorporation:    Poland

HQ Country(ies):    Poland

Entity Type:    Subsidiary

FCPA Claims:    Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B)) ; Internal Controls, Primary, Knowing Violation (15 U.S.C. § 78m(b)(5)) ; Books & Records , Aiding and Abetting/Causing (18 U.S.C. § 2, 15 U.S.C. § 78m (b)(2)(A), and/or 15 U.S.C. § 78m(b)(5)) ; Books & Records, Primary, Issuer [Willful] (15 U.S.C. § 78m (b)(2)(A); 15 U.S.C. § 78ff(a)) ; Internal Controls, Primary, Issuer [Willful] (15 U.S.C. § 78m (b)(2)(B); 15 U.S.C. § 78ff(a))

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Issuer ; Aider & Abettor/Cause/Control Person

Period of Bribery:   2006 - 2010

Total Bribery Payments:    $600,000

Total Revenue Generated from Bribery:    $60,000,000

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Poland

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Director of Information and Communications Technology; Komenda Glowna Policji

Defendant-Related Entities Involved in the Misconduct:    N/A

Third-Party Intermediary:    N/A

Type of Bribe:   Electronics/Computer Equipment, Entertainment/Recreation, Money

Cash, Wire or Check:    Cash (bills/coins/etc.)

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Bribes to Polish officials

Period of Bribery:   2006 – 2010

Total Bribery Payments:    $600,000

Total Revenue Generated from Bribery:    $60,000,000

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Poland

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Director of Information and Communications Technology; Komenda Glowna Policji;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    N/A

Type of Bribe:   Electronics/Computer Equipment, Entertainment/Recreation, Money

Cash, Wire or Check:    Cash (bills/coins/etc.)

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Hewlett-Packard Company

Subsidiary:  Hewlett-Packard Polska, SP. Z O.O.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:    Indirect
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

Re: Hewlett-Packard Polska, SP. Z O.O.

  • Inadequate internal controls or auditing

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Hewlett-Packard Polska, SP. Z O.O.        

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Hewlett-Packard Polska, SP. Z O.O.    

Total Monetary Sanctions for the Action:    $15,450,224

Case Status:    Resolved


Disposition:    Deferred Prosecution Agreement

Date of Disposition:    04/09/2014

Hewlett-Packard Polska, SP. Z O.O.

—  Total Monetary Sanctions for Defendant:    $15,450,224

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Self-reporting

—  Admission of Guilt/Acceptance of Responsibility:    Yes

No Document Title Date Category