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 user 2004-03-12 at 11:10:00 am Views: 96
  • #6512
    UPDATE – Canada, Hewlett-Packard in C$159 mln contract row
    (OTTAWA, March 11 (Reuters) – The Canadian government said on Thursday it had demanded repayment of C$159 million ($120 million) from computer maker Hewlett-Packard  to settle a dispute involving defense ministry contracts.
    Public Works Minister Stephen Owen also said Ottawa was withholding C$50 million in payments to the U.S. firm and “will take further action if necessary”.

    The government says the money covers the value of defense ministry contracts given to Hewlett-Packard for which there is no evidence that any work was done. The company has until March 22 to pay back the money or provide proof the work was completed.

    The demand for payment follows an internal ministry audit and a police investigation into billing irregularities involving computer subcontractors. One civilian employee at armed forces’ headquarters has already been fired.

    “This was a very sophisticated criminal scheme,” Owen told reporters after a meeting of cabinet.

    “The government of Canada has had very strong legal advice that the responsibility for this — if there have been false invoices submitted and paid — lies with Hewlett-Packard… clearly there was something that went seriously amiss here.”

    Ottawa is also demanding that Hewlett-Packard provide all details of official contracts it had been given by the ministry from 1991 to 2003, with a total value of C$366 million.

    Hewlett-Packard issued a statement saying there was “no merit to the government’s demands” and blamed the problems on sub-contractors, which it said Ottawa had insisted be hired.

    Owen denied this was the case.

    The affair comes as Ottawa deals with the aftermath of a patronage scandal in which C$100 million ($75 million) in funds from a government sponsorship program was funneled to advertising firms with close ties to the ruling Liberal Party between 1997 and 2001.

    A bureaucrat at the public works ministry who worked on the program said on Thursday that he had spotted problems as early as 1994, a year after the Liberals took power.

    “I became concerned that contracts were regularly being backdated. Commissions were paid for services apparently not performed. There appeared to be improper advance payments,” Allan Cutler told Parliament’s public accounts committee.

    “Contracts were being issued without prior financial authorization,” said Cutler, adding that he had been effectively demoted when he publicized his concerns.