HP 2012 Annual Report Download - page 163

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 18: Litigation and Contingencies (Continued)
The U.S. Department of Justice and the SEC have also been conducting an investigation into the
Russia GPO deal and potential violations of the Foreign Corrupt Practices Act (‘‘FCPA’’). Under the
FCPA, a person or an entity could be subject to fines, civil penalties of up to $500,000 per violation
and equitable remedies, including disgorgement and other injunctive relief. In addition, criminal
penalties could range from the greater of $2 million per violation or twice the gross pecuniary gain or
loss from the violation.
In addition to information about the Russia GPO deal, the U.S. enforcement authorities have
requested information from HP relating to certain transactions in Russia and in the Commonwealth of
Independent States sub-region dating back to 2000.
HP is cooperating with these investigating agencies.
ECT Proceedings. In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e
Te l ´ egrafos (‘‘ECT’’), notified HP that it had initiated administrative proceedings against an HP
subsidiary in Brazil (‘‘HP Brazil’’) to consider whether to suspend HP Brazil’s right to bid and contract
with ECT related to alleged improprieties in the bidding and contracting processes whereby employees
of HP Brazil and employees of several other companies coordinated their bids for three ECT contracts
in 2007 and 2008. In late July 2011, ECT notified HP it had decided to apply the penalties against HP
Brazil, suspending HP Brazil’s right to bid and contract with ECT for five years, based upon the
evidence before it. In August 2011, HP filed petitions with ECT requesting that the decision be
revoked and seeking injunctive relief to have the application of the penalties suspended until a final,
non-appealable decision is made on the merits of the case. HP is currently awaiting a response from
ECT on both petitions. Because ECT did not rule on the substance of HP’s petitions in a timely
manner, HP filed a lawsuit seeking similar relief from the court. The court of first instance has not
decided the merits of HP’s lawsuit, but has denied HP’s request for injunctive relief suspending
application of the penalties pending a final, non-appealable decision on the merits of the case. HP
appealed the denial of its request for injunctive relief to the intermediate appellate court, which issued
a preliminary ruling denying the request for injunctive relief but reducing the length of the sanctions
from five to two years. HP appealed that decision and, in December 2011, obtained a ruling staying
enforcement of ECT’s sanctions until HP can be heard on the full merits of the case. HP expects the
appeal on the merits to last several years.
Stockholder Litigation. As described below, HP is involved in various stockholder litigation
commenced against certain current and former HP executive officers and/or certain current and former
members of the HP Board of Directors in which the plaintiffs are seeking to recover certain
compensation paid by HP to the defendants and other damages:
•Saginaw Police & Fire Pension Fund v. Marc L. Andreessen, et al. is a lawsuit filed on October 19,
2010 in the United States District Court for the Northern District of California alleging, among
other things, that the defendants breached their fiduciary duties and were unjustly enriched by
consciously disregarding HP’s alleged violations of the FCPA. On August 15, 2011, the
defendants filed a motion to dismiss the lawsuit. On March 21, 2012, the court granted the
defendants’ motion to dismiss, and the court entered judgment in the defendants’ favor and
closed the case on May 29, 2012. On June 28, 2012, the plaintiff filed an appeal with the United
States Court of Appeals for the Ninth Circuit.
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