HP Settles Kickback Case With DoJ

The computer giant denies it engaged in any illegal conduct in a case stemming from claims of abuse in winning government contracts.

Hewlett-Packard said it has reached a settlement with the Department of Justice this week over a long-running case involving government contracts, though the PC maker denied it did anything illegal.

A report in the Financial Times said the case dates back to 2007 and involves complaints HP (NYSE: HPQ) overcharged the government on multiple federal contracts.

"HP has agreed to a settlement with the Department of Justice, without any admission of wrongdoing, in order to resolve the allegations in full," the company said in a brief statement.

The company also said the settlement would have a negative impact on its third quarter fiscal earnings of approximately two cents a share. Since HP has over 2 billion shares outstanding, the settlement cost could reach as high as $50 million.

HP this week also said it had settled the Rille whistleblower case, which had sparked the DoJ's investigation. The Rille complaint, filed in the U.S. District Court in the Eastern District of Arkansas in 2007 by Normal Rille and Neal Roberts, involved charges that HP, Sun Microsystems (now owned by Oracle), consulting firm Accenture and others provided kickbacks, including illegal rebates, to win government contracts.

The charges actually date as far back as the late 1990s, when the government said HP and others began submitting false claims for IT hardware and services on numerous government contracts.

The settlement announcement comes on the heels of a lawsuit the DoJ filed last week against Oracle (NASDAQ: ORCL). In the Oracle case, the government charged the enterprise software giant with defrauding the federal government on a massive software contract worth hundreds of millions of dollars between 1998 and 2006..

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.




Tags: government IT, government market, Sun, HP, DOJ


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