HP Will Be Paying Out $16.25 M in Settlement

hp fraud

HP is a very well-known technological name, but the company is really not having the best of years so far in 2010. It’s not their sales numbers or their products; it’s something very different that they had complete control over. On Wednesday, the Department of Justice announced that HP will be paying out $16.25 million in order to settle e-rate fraud charges.

The Department of Justice and the Federal Communications Commission say that contractors for HP “wined and dined” certain Dallas public school officials so that they would be able to obtain insider information that would assist them in winning competitive e-rate contracts from the school system. These contracts are a government program that work to fund Internet connections in public schools and libraries.

Now, HP’s contractors did more than just take workers from the Dallas Independent School District and the Houston Independent School District out to dinner or something like that. These contractors bought the school officials lavish gifts that included things like yacht trips and tickets to the 2004 Super Bowl. All of these gifts helped HP to secure the contracts that they wanted. These contracts included more than $17 million worth of HP equipment. The government was tipped off about HP’s dealings with the school districts. This prompted the Department of Justice and the Federal Communications Commission’s investigation of the allegations.

As a result of HP’s dealings and of the Federal Communication Commission’s investigations, they will be paying out $16.25 million. The FCC says that most of the money will be returned to the e-rate program. They have also said that in the future they will make sure that HP follows all of the e-rate requirements so that this does not happen again.

“The FCC’s compliance agreement with HP ensures that HP will train its employees thoroughly on the FCC’s gift and other e-rate rules and provides for audits of HP’s e-rate business,” said the general counsel of the FCC, Austin Schlick. “If HP fails to monitor its e-rate activities closely and abide by e-rate program requirements, it will face substantial penalties.”

HP said that they have now dismissed all of the contractors that broke the rules concerning the e-rate contract. “HP requires that all employees and partners adhere to lawful and ethical business practices,” stated the company. “The activities at the center of this investigation occurred more than five years ago, the partner relationships have been terminated, and the employees involved are no longer with the company.” They also added, “HP fully cooperated with the authorities, and the matter is now resolved.”

The chairman of the FCC, Julius Genachowski, said, “Broadband is key to our children’s 21st century education. That’s why one of the FCC’s top priorities is making sure e-rate works to benefit students and libraries. Today’s settlement shows the extensive efforts of the FCC and DOJ to protect the e-rate program from waste, fraud, and abuse, and to deter misconduct in the future.”

The FCC edited the e-rate program slightly in September so that there would be no misunderstandings or abuses concerning the rules about soliciting or receiving gifts within the program. They also added a few rules to make sure that the bidding process was completely fair for everyone that is involved.

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