H-P Executives Face Bribery Probes

[HardOCP News]

Hewlett-Packard Co. executives stand accused of paying almost $11M in bribes to win a lucrative contract in Russia. The kicker? The people accused of taking the bribe handle criminal prosecutions in Russia…including corruption cases.

German prosecutors are looking into the possibility that H-P executives paid about €8 million ($10.9 million) in bribes to win a €35 million contract under which the U.S. company sold computer gear, through a German subsidiary, to the office of the prosecutor general of the Russian Federation. The office handles criminal prosecutions in Russia, including many corruption cases.

 

[Ibanezfoo]

I don't see the problem here... this is how Russia gets things done. This is how the people get around all that communist BS. Ask any Russian, they will tell you...

 

[dochmbi]

I thought bribery was standard business practice, nothing to be prosecuted.

 

[the-one1]

Isn't that how it works over here in the US of A too. Money talks doesn't it? I've heard Jackson and Benjamen talking at night in my wallet before.

 

[Gynecologist]

Corruption is mind-numbingly rampant everywhere. Stevie Wonder could see that.

 

[weebling1]

I don't see the problem here... this is how Russia gets things done. This is how the people get around all that communist BS. Ask any Russian, they will tell you...

'cept they ain't communists, now their capitalists

 

[Mohonri]

There's this little thing called the Foreign Corrupt Practices Act, which makes it illegal for a US person or entity to bribe a foreign official, even if such an act is not specifically illegal in the country where it is performed. This goes top-to-bottom as well--it's not just the CEO sending a bag of money to some African president, it also includes the poor sap who gets extorted out of $20 at the Nigerian airport rather than get stabbed with a rusty needle by a customs official. (and no, I'm not exaggerating here. I've heard first-hand stories. It's a zoo over there)

It has some nasty fines associated with it, too. And if the company tries to cover it up, the fines get really big. Big enough that companies (including mine) voluntarily confess when something happens.

 

[Ibanezfoo]

'cept they ain't communists, now their capitalists

sshhhhh! Nobody is supposed to know that. Ruins all the propaganda

 

[TheResidentEvil]

In soviet russia, companies bribe you!

 

[EchtoGammut]

€8 million for a €35 million contract? That is a 23% bribe. Considering the margin on computer equipment is usually under 30%, that means they would be making less than 7% on the deal. That isn't lucrative. Especially, when you consider the salesman's commission will be around 2-3%. If I was the sales manager for whomever made this deal, I would can that sale guy, unless this deal was a gateway to other large sales.

 

[gesicht]

bribing and under the tables deals are not part of capitalism. the only way capitalism works if is fair. soon as it is unfair the system falls apart. the sad thing it is pretty much considered standard practice. look at us. we have several major companies and people that have a gross disproportional distribution of wealth because they abuse the idea of capitalism.

people say capitalism breeds competition but the only point of competition is to win. no one wins anymore by creating a better product or service. they win by playing dirty. sadly intel is of the best cases of this. hell the EU fined them 1.45 billion last year for it. intel made tons of deals so AMD products wouldn't hit the shelves all over europe. sounds like the exact opposite of capitalism to me.

 

[srangara]

In soviet russia, companies bribe you!

Somebody had to do it.

€8 million for a €35 million contract? That is a 23% bribe. Considering the margin on computer equipment is usually under 30%, that means they would be making less than 7% on the deal. That isn't lucrative. Especially, when you consider the salesman's commission will be around 2-3%. If I was the sales manager for whomever made this deal, I would can that sale guy, unless this deal was a gateway to other large sales.

It seems clear from the charges that the bribes were being written off. From Reuters:

The unidentified suspects are under investigation for possible breach of trust, tax evasion and bribery of foreign officials, the spokesman for the prosecutors' office in Dresden said.

In any case, 7% is still €2.45M, and we don't know the details--it could be on inventory that wasn't moving anywhere else. There's no margin at all if you don't sell. By winning the contract, it's also money that your competitors are NOT getting.