HP docked in Germany on corruption charges, Russian offices raided

Russian authorities yesterday raided and searched Hewlett-Packard's (HP) offices in Moscow to investigate whether the world's largest personal computer maker's German office bribed Russian officials in 2003 to win a €35 million contract in Russia.

Russian prosecutors also raided several overseas companies based in Moscow, including Strabag SE, Hermitage Capital Management and Siemens, although it is not clear as to why these companies were raided and searched.

The Russian prosecutors conducted the search at the request of German authorities, after German tax authorities found out last year from a routine check of account books of a small company in the East German state of Saxony that it could not explain for some money in their accounts and certain money transfers.

A detailed investigation by the German tax authorities in December 2009 led to money transfers globally to front companies, which made the German authorities search HP's German headquarters in Boeblingen and also its office in Munich.
German authorities then arrested two former and one current employees of HP, although none of them were formally charged. They were later released on bail.
 
Prosecutors in the German city of Dresden suspect that HP paid about €8 million in bribes to win a €35 million contract in 2000 to supply computers and software for criminal prosecutors in Moscow. The contract was signed in 2003.

The Wall Street Journal, citing people familiar with the investigation and German court documents, said German authorities are yet to identify the recipients of the €8 million, which was funnelled through a network of shell companies and accounts in places including the UK, Austria, Switzerland, the British Virgin Islands, Belize, New Zealand, the Baltic nations of Latvia and Lithuania, and the US states of Delaware and Wyoming.

Palo Alto, California-based HP, said in a statement, "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."