HPThe HP FCPA settlement was not your run-of-the-mill enforcement action.  The blogosphere has been filled with different analyses and interpretations.  Client alerts have been taking shots at coming up with original ideas and takeaways.

HP is an unusual settlement for the following reasons:

1.  The Three-Part settlement is highly unusual and reflects the Justice Department’s assessment of HP’s conduct.

2.  No matter how HP (and commentators) spin it, the conduct was egregious.

3.  HP earned significant credit for its cooperation and disclosure.

4.  DOJ’s presentation and generalizations reflect hard-fought negotiations with defense counsel.

The structure of the settlement sends an important message to companies and the FCPA practitioner community.  HP’s conduct was blatant.  Instead of a single company settlement, HP entered a three-tiered settlement: one subsidiary plead guilty to a criminal information; one HP subsidiary was given a Deferred Prosecution Agreement; and another HP subsidiary was given a Non-Prosecution Agreement.

HP’s Russian subsidiary entered a guilty plea to conspiracy and substantive felony violations of the FCPA.  HP’s Poland subsidiary entered into a Deferred Prosecution Agreement; and HP’s Mexico subsidiary entered into a Non-Prosecution Agreement.   In total the three HP entities will pay $76 million in criminal penalties and forfeitures.

In a related filing, the SEC and HP entered into a civil settlement under which HP agreed to pay $31 million in disgorgement, prejudgment interest, and civil penalties.hp4

The conduct itself, as described in the government’s paperwork is blatant.  HP subsidiaries set up slush funds for bribe payments, used a web of shell companies and bank accounts to conceal the movement of money for bribery purposes, and kept a separate set of books to track the bribe payments.  The scheme even included secret meetings with deliveries of bags of cash.

HP, however, did a masterful job of putting these horrible facts behind the company.  HP has made it sound like the violations were carried out by a small number of former officials and employees.

In many respects, HP has proven this headline to be true – HP provided extraordinary cooperation and implemented extensive remediation.  By doing so, HP cut the ties with its past, earned significant discounts and credits, and ultimately avoided serious penalties.

Without this extraordinary effort, HP could be sitting close to the top of the FCPA Top 10 list for penalties and fines.

hp2The HP enforcement action reflects the hard work and dedication of the company to institute change in corporate governance and ethics and compliance.  Many compliance practitioners are aware of HP’s best practices and other reforms instituted in order to enhance its ethics and compliance program.

HP’s defense counsel also were successful in carefully crafting changes to the statement of facts or modifications that were consistent with HP’s overall strategy and message – HP’s horrible past of corruption is gone and a new era has begun.

For its part, DOJ can hold its head high for its win-win:  DOJ sent a message with its precedent-setting triple play of corporate resolutions, and for crediting HP’s extraordinary cooperation and remediation.

Topics:  Civil Monetary Penalty, Deferred Prosecution Agreements, Disgorgement, DOJ, Enforcement Actions, FCPA, Foreign Subsidiaries, Hewlett-Packard, Non-Prosecution Agreements, Prejudgment Interest, Remediation, SEC, Settlement, Subsidiaries

Published In: General Business Updates, Criminal Law Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Group Law Firm | Attorney Advertising

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