HP Investigated for Possible Bribery

Intel Execs arrested in bribery investigationHewlett-Packard (HPQ) executives in Germany are being investigated for allegedly paying bribes to win a contract in Russia. The bribe amounts could be in the millions of dollars.

Late Wednesday, The Wall Street Journal reported that "German prosecutors are looking into the possibility that HP 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." On Thursday, the paper said that the U.S. Securities and Exchange Commission has joined in on the investigation.

HP has reacted to the claims by saying, "This is an investigation of alleged conduct that occurred almost seven years ago, largely by employees no longer with HP. We are cooperating fully with the German and Russian authorities and will continue to conduct our own internal investigation." The investigation is examining whether the bribes were paid by funneling money through a number of countries, presumably to avoid detection.

The accusations are unlikely to have any effect on the company unless it can be proved that supervisors of the employees under investigation knew what was going on. HP has not made any public statements about the incident beyond its initial reaction.

The news will probably be no more than a day of bad headlines for the computer company. HP stock is trading at a 52-week high of $54.64. The recent quarterly earnings report from Intel (INTC) indicates a strong surge in computer buying, as does an IDC report that shows global PC sales rose 24% in the first quarter. HP has almost 20% of the world's PC sales, which puts it in the top position in the category.

The scandal makes a good story for the press, but that's it.

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