HP settles US government kickback probe

Hewlett-Packard said on Monday that it had agreed to settle a long-running US justice department investigation over claims it overcharged the government on multiple federal contracts, and would take a charge of 2 cents a share, which works out to about $47m.

HP gave few details on the allegations, which it said it would continue to deny. The investigation was related to a whistle-blower case from 2007 that accused the computer maker of paying kickbacks to consultants who recommended HP products for government purchase.

The justice department eventually intervened in a False Claims Act case brought by Normal Rille and Neal Roberts in federal court in Arkansas.

Their suit said that HP paid a list of systems integrators millions of dollars in “influencer fees” if they successfully put HP products forward in government deals. The integrators had an obligation to act in the government’s best interest but did not, the suit said.

The number one computer maker also gave “New Business Opportunity” payments when it was included as a subcontractor on government contracts. Those payments were not intended to be passed on to the government agency, and the same products could have been obtained with volume pricing deals that would have reduced the payments, according to the suit.

Both types of payments met the definition of kickbacks in federal laws designed to stop overcharging, the suit said.

A dozen other technology companies were implicated in the case as well.

HP shares rose 6 cents in after-hours trade, after closing 3.3 per cent higher at $47.56 on Monday.