HP to Settle Justice Department Kickbacks Lawsuit for $50 Million

HP plans to put an end to a three-year lawsuit from the Department of Justice with a settlement that will cost it 2 cents per share in profit. Hewlett-Packard (HPQ) said Monday that it has agreed in principle to settle a lawsuit by the Department of Justice, which alleged that HP and other technology companies paid kickbacks to Accenture (ACN) in exchange for recommendations for government work.

HP denied "engaging in any illegal conduct." It said the deal will lower its fiscal third-quarter profit by 2 cents per share. That's about $50 million given that it has 2.33 billion shares outstanding.

"We believe it is in the best interest of our stakeholders to resolve the matter and move beyond this issue," HP said in a statement.

A Justice spokesman declined to comment.

The settlement still needs to be approved by the Justice Department, an Arkansas district court where the original lawsuit was filed, and government agencies.

Other Kickback Suits

The government joined whistleblower lawsuits against HP, Accenture and Sun Microsystems in 2007 over the arrangements, alleging violations of the False Claims Act. The companies had "alliance relationships" in which they agreed to work together, but the agreements resulted in what amounted to kickbacks in securing government contracts, it said at the time.

Microsoft (MSFT) also was named a whistleblower lawsuit, but the government declined to join the lawsuit and the case was dismissed.

Last week, the Justice Department said it was joining a fraud lawsuit against Oracle (ORCL) related to software contracts worth hundreds of millions of dollars.

The agency said Oracle failed to offer government customers the same discounts on its software that it offered commercial customers. As a result, the lawsuit alleges, Oracle overcharged the government on a contract that ran from 1998 to 2006.

HP shares rose 10 cents to $47.66 in after-hours trading. The stock finished regular trading up $1.52, or 3.3%, at $47.56.


Increase your money and finance knowledge from home

Reading a Stock Quote

Learn to read the ingredients of a stock.

View Course »

Socially Responsible Investing

Invest in companies with a conscience.

View Course »

Add a Comment

*0 / 3000 Character Maximum