HP accused of paying bribes to seal deal in Russia

German prosecutors uncover suspicious international money trail

Hewlett-Packard, the world's largest computer manufacturer, faces allegations that it secretly paid millions of euros to secure a contract in Russia – from the very organisation that investigates bribery and corruption.

German authorities are following an international money trail that has reportedly taken in the US, the UK, the British Virgin Islands and Belize, among other places, after turning up suspicious cash transfers through a small company in the German state of Saxony.

The investigation has centred on a €35m contract to supply computer services and hardware to the office of the Russian prosecutor general. On Wednesday, Russian investigators raided HP's offices in Moscow, following a request from Germany.

German authorities say they have targeted nine suspects, including former staff at HP. "The case came to light here," a spokesman for the prosecutors' office in Dresden said. "The suspicion is that €8m in kickback payments were made."

HP confirmed that an investigation was under way, but would not discuss specific allegations. "This is an investigation of alleged conduct that occurred almost seven years ago, largely by employees no longer with HP," the company said in a statement. "We are co-operating fully with the German and Russian authorities and will continue to conduct our own internal investigation."

The multi-year contract with the prosecutor general's office was signed in 2003 with an HP subsidiary based in Germany, but it remains unclear to whom the alleged bribes were paid and over what period.

The unidentified suspects are under investigation for possible breach of trust, tax evasion and bribery of foreign officials, according to the Dresden prosecutors' office. The office is awaiting documents seized in the searches in Moscow before deciding its next move.

HP became aware of the German investigation four months ago, when its premises in the southern town of Boeblingen and in Munich were searched and arrests were made in Germany and Switzerland. Those arrested included three former HP executives. No charges have been brought.

Reports yesterday, citing legal filings, show that investigators have followed a money trail through an international network of shell companies and bank accounts in more than half a dozen countries.

The HP case is the latest corruption investigation involving multinational companies in Germany. The car maker Daimler last month agreed to pay $185m to settle US charges that it bribed foreign officials, including in Russia, handing over money and gifts to win contracts.

HP is yet to make a formal disclosure of the investigation in a report to shareholders. As a company with operations in the US, it could also face fines and prosecution in the US under the Foreign Corrupt Practices Act.

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