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Tuesday, 03 August 2010 08:59

HP “reaches agreement” over kickbacks

Written by Nick Farell
hp_logo_new

DoJ will leave us alone now
Maker of printer ink which is more expensive than gold, HP said that it has reached a settlement with the U.S. Department of Justice to “resolve an investigation” into kickbacks paid by computer vendors on government contracts.

According to the Wall Street Journal the DoJ was apparently looking very carefully at a 2007 investigation into a Government Service Administration contract. The case was the subject of a separate civil complaint that was filed in federal court in Arkansas.

HP insists that it has done nothing wrong. It insists this so strongly that it is writing a cheque for no reason to the DoJ for a large sum of money. You do that when you are completely innocent, apparently. How much money? Well HP is not saying but the outfit says that it will result in a charge of about 2 cents a share in the fiscal third quarter.

According to Shannon Cross of Cross Research the amount of cash will not be that great. Several of these suits have come up with other tech companies, so investors won't be too concerned about it," she said, adding that she still expects a strong quarter out of HP. “People will look past this." In other words investors do not give a monkey's about whether HP was cheating the government and taxpayer to earn a few extra shekels.

All this started when there was a series of whistle-blower suits by a former employee of computer outsourcing and consulting firm Accenture PLC (ACN). The suits claimed HP regularly violated the Anti-Kickback Act of 1986 by forming marketing partnerships involving what some companies called "influencer fees" or "referral fees"- payments or discounts that passed between the companies doing business together on federal contracts but weren't revealed to the government.

Computer vendors claimed that the payments were a common rebate and discount programs widely used in their industry and others. Other companies have settled the allegations.

Nick Farell

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