HP 2014 Annual Report Download - page 169

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Litigation and Contingencies (Continued)
German PPO has issued an indictment of four individuals, including one current and two former HP
employees, on charges including bribery, breach of trust and tax evasion. The German PPO has also
requested that HP be made an associated party to the case, and, if that request is granted, HP would
participate in any portion of the court proceedings that could ultimately bear on the question of
whether HP should be subject to potential disgorgement of profits based on the conduct of the indicted
current and former employees. The Polish Central Anti-Corruption Bureau is also conducting an
investigation into potential corruption violations by an employee of Hewlett-Packard Polska Sp. z o.o.,
an indirect subsidiary of HP, in connection with certain public-sector transactions in Poland. HP is
cooperating with these investigating agencies.
The DOJ and the SEC also conducted an investigation into the Russia GPO deal and potential
violations of the Foreign Corrupt Practices Act (‘‘FCPA’’). In addition, the same U.S. enforcement
agencies conducted investigations into certain other public-sector transactions in Russia, Poland, the
Commonwealth of Independent States and Mexico, among other countries. On April 9, 2014, HP
announced a resolution of the DOJ and SEC FCPA investigations. Pursuant to the terms of the
resolution of the DOJ and SEC FCPA investigation announced in April 2014, on September 11, 2014,
an HP subsidiary in Russia, ZAO Hewlett Packard A.O., entered a guilty plea in the United States
District Court, Northern District of California, to criminal violations of the FCPA. HP paid the SEC
approximately $31 million, and paid approximately $77 million in fines and penalties pursuant to its
agreements with the DOJ. HP also has agreed to undertake certain compliance, reporting and
cooperation obligations.
On December 2, 2014, plaintiffs Petroleos Mexicanos and Pemex Exploracion filed a complaint
against HP and HP Mexico in the United States District Court for the Northern District of California
alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO Act), fraudulent
concealment, tortious interference, and violations of the California Unfair Competition Law in
connection with alleged improper payments provided to Pemex officials by third-parties retained by HP
Mexico. These allegations arise from the same subject-matter as a previously disclosed 2014 Non-
Prosecution Agreement between HP Mexico and the DOJ and a simultaneous cease-and-desist order
against HP issued by the SEC. HP is investigating this claim, however, HP does not believe that the
resolution of this matter will have a material impact on its financial statements.
ECT Proceedings. In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e
Te l ´ egrafos (‘‘ECT’’), notified an HP subsidiary in Brazil (‘‘HP Brazil’’) that it had initiated
administrative proceedings 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 allegedly coordinated their bids and fixed results
for three ECT contracts in 2007 and 2008. In late July 2011, ECT notified HP Brazil it had decided to
apply the penalties against HP Brazil and suspend HP Brazil’s right to bid and contract with ECT for
five years, based upon the evidence before it. In August 2011, HP Brazil appealed ECT’s decision. In
April 2013, ECT rejected HP Brazil’s appeal, and the administrative proceedings were closed with the
penalties against HP Brazil remaining in place. In parallel, in September 2011, HP Brazil filed a civil
action against ECT seeking to have ECT’s decision revoked. HP Brazil also requested an injunction
suspending the application of the penalties until a final ruling on the merits of the case. The court of
first instance has not issued a decision on the merits of the case, but it has denied HP Brazil’s request
for injunctive relief. HP Brazil 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
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