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 user 2010-04-19 at 11:06:03 am Views: 80
  • #23881

     The U.S. has joined German
    and Russian authorities in investigating whether Hewlett-Packard Co.
    executives paid millions of dollars in bribes to Russian officials to
    win a contract in Russia, according to people familiar with the
    matter.The U.S. Justice Department and Securities and Exchange
    Commission are investigating whether H-P committed any violations of the
    Foreign Corrupt Practices Act, these people said, as part of a widening
    probe into the company’s activities. The law bars American companies
    from bribing foreign-government officials anywhere in the world.

    the Justice Department can pursue criminal charges against companies
    and individuals for FCPA violations, the SEC can levy civil penalties
    against alleged violators.An H-P spokeswoman said the company had
    discussions Thursday with the SEC regarding the German probe “and is
    fully cooperating with U.S. and German authorities on this matter.”

    prosecutors have centered their inquiry into the suspected bribes on
    one current and two former senior executives of the U.S. computer maker,
    according to German court records and people familiar with the probe.
    Those under investigation include a former head of H-P’s sales
    operations in Russia and the former Soviet Union.

    The Money Trail
    prosecutors are investigating whether H-P executives paid €8 million
    ($10.9 million) in bribes, via a complex network, to win a €35 million
    Russian contract. See chart

    German authorities ordered the arrest
    of the three in early December on suspicion of bribing foreign
    officials, tax evasion and breach of trust, according to court records.
    All have since been released on bail, and haven’t been indicted. A
    prosecution spokesman said they remain suspects, but that investigators
    haven’t found any evidence that they enriched themselves.The inquiry,
    the most significant probe in years of possible bribery involving a U.S.
    company in Russia, comes as H-P has been trying to repair its image in
    the wake of a 2006 boardroom spying scandal that sparked criminal
    prosecutions, civil lawsuits and the resignation of the company’s

    Russian investigators raided H-P’s Moscow offices
    Wednesday in connection with the German bribery probe, which court
    records show has been under way for two years.

    German prosecutors
    are looking into whether H-P executives paid about €8 million ($10.9
    million) in bribes to win a €35 million contract to supply computer
    equipment throughout Russia to the country’s prosecutor general, the
    federal authority responsible for handling criminal cases.

    prosecutors are investigating whether H-P executives devised a plan to
    send funds to Russia through a complex network involving German
    middlemen, shell companies spread from Wyoming to New Zealand, and a
    Moscow computer supplier, according to German court records and people
    close to the investigation.

    The prosecutors say they are looking
    into whether a German H-P subsidiary called Hewlett-Packard
    International Sales Europe GmbH, after receiving a €35 million payment
    for the Russian contract, sent about €8 million in suspected bribes back
    to unidentified officials in Russia. Prosecutors suspect that money was
    funneled through three German middlemen, all independent sellers of H-P
    equipment based in eastern Germany.The three suspected middlemen
    allegedly received fake invoices from shell companies representing
    unidentified parties through a Moscow-based computer supplier.

    funds provided by H-P, the three middlemen are alleged to have paid the
    invoices—for equipment they never purchased—to shell companies with
    bank accounts in Latvia, Lithuania, Austria, Switzerland and Belize.
    German prosecutors haven’t identified the ultimate beneficiaries of the
    shell companies. In return, the suspected middlemen allegedly received
    commissions totaling several hundred thousand dollars, according to
    court documents. There are no indications that the H-P executives or the
    intermediaries tried to use the funds for their own benefit.

    say they are still trying to determine the ultimate recipients of the
    payments, which court records show were sent between 2004 and 2006. The
    records appear to contradict a statement made by an H-P spokesman
    Wednesday that the German investigation involves “alleged conduct that
    occurred almost seven years ago.” H-P said it stands by that statement.

    three H-P employees under investigation, according to German court
    records, are: Hilmar Lorenz, the former head of HP sales in Russia and
    the former Soviet Union; Kenneth Willett, who led a Germany-based H-P
    unit that dealt with equipment sales throughout Europe, the Middle East
    and Africa from 2003 until it was disbanded in 2007; and Paeivi
    Tiippana, who preceded Mr. Willett as head of the German unit.

    Willett, an American, currently works for H-P as a senior marketing
    executive in Germany, but H-P said he is on administrative leave. He was
    released from a German jail on Jan. 6 after posting €250,000 bail.
    Through his lawyer, Mr. Willett said he did nothing wrong.

    Lorenz, who arranged the Russian deal at the center of the probe for H-P
    in 2003, was arrested on Dec. 2 on suspicion of bribing foreign
    officials and related crimes, according to the records. After spending
    nearly four months in jail, Mr. Lorenz was released on March 25 after
    agreeing to talk to prosecutors and posting a bond of €160,000,
    according to court documents.

    Mr. Lorenz worked for H-P at least
    until the end of 2007, according to court records. He now runs a
    consulting business from his home outside Berlin. He didn’t respond to
    requests for comment. On Thursday, a man who answered the door at his
    home declined to comment. A lawyer for Mr. Lorenz also declined to

    Ms. Tiippana, a Finnish national who lives near Zurich,
    didn’t respond to a written request for comment that was forwarded to
    her lawyer. Ms. Tiippana, who was arrested in Switzerland, was released
    from jail on Dec. 30 after about four weeks in detention, according to
    the court records.

    German authorities are looking into whether
    Mr. Lorenz conceived the alleged plan to divert bribes through shell
    companies, court records show. For the better part of a decade, Mr.
    Lorenz was a key H-P representative in Russia and the former Soviet
    Union, securing millions of dollars in contracts for the company,
    according to news accounts from that period.

    Mr. Lorenz was often
    joined by senior government officials in announcing the deals,
    according to Russian news reports between 1999 and December 2007. In
    November 1999, Mr. Lorenz joined Russian leader Vladimir Putin at the
    opening of a supercomputer center in Moscow, the Russian media reported
    at the time.

    The prosecution spokesman, Wolfgang Klein, said the
    investigation was started in 2007 when a tax auditor discovered bank
    records showing that between 2004 and 2006, the H-P subsidiary paid €22
    million into the account of ProSoft Krippner GmbH, a small
    computer-hardware company in Leipzig. The records indicated the payment
    was made for services performed in Moscow, according to Mr. Klein.

    Klein said the size of the payment to ProSoft Krippner caught the tax
    auditor’s attention, and that he flagged the transfer to a special
    prosecution team in Dresden that handles major corruption cases.

    Krippner Chief Executive Ralf Krippner, who is also a member of the
    local parliament in the German district of North Saxony, declined to
    comment. He referred questions to his lawyer, who also declined to
    comment. Prosecutors confirmed Mr. Krippner is a suspect in the probe,
    but he hasn’t been indicted.

    Dieter Brunner, a bookkeeper who is a
    witness in the probe, said in an interview that he was surprised when,
    as a temporary employee of H-P, he first saw an invoice from ProSoft
    Krippner in 2004. “It didn’t make sense,” because there was no apparent
    reason for H-P to pay such big sums to accounts controlled by
    small-business men, Mr. Brunner said.

    Mr. Brunner said he
    processed the transactions anyway because he was the most junior
    employee handling the file. “I assumed the deal was OK, because senior
    officials also signed off on the paperwork,” he said.H-P declined to
    comment.Mr. Brunner isn’t a suspect in the case, according to the
    prosecution spokesman.

    Russian authorities raid HP offices
    in Moscow

    Russian investigators working with German
    authorities have raided the Moscow offices of PC maker Hewlett-Packard
    to probe alleged bribery-linked to sales to a Russian government
    agency.HP executives allegedly paid bribes of $10.9m in 2003 to win a
    $47.8m contract for equipment supplied in Russia through a German
    subsidiary, according to the Wall Street Journal.The raid involved “an
    investigation of alleged conduct that occurred almost seven years ago,
    largely by employees no longer with HP,” the company said.”We are
    co-operating fully with the German and Russian authorities and will
    continue to conduct our own internal investigation,” HP said.