Alleged federal violations and kickbacks have shareholders attack HP

HP’s  directors are reportedly being sued by shareholders over claims they permitted or encouraged violations of federal kickbacks and foreign bribery laws.

According to a complaint filed in the federal court, HP violated a federal anti-kickback law by paying government vendors “influencer fees” to win contracts to design information technology systems between 2007 and 2009.

Bloomberg says HP is also under investigation for possible violations of the U.S. Foreign Corrupt Practices Act.

Current and former directors at HP “consciously condoned HP’s illegal and unethical marketing practices,” the court filing said.

The shareholders attacked the directors, suggesting the misconduct had “put the company at risk of having its U.S. government contracts rescinded.”

They pointed out HP sales to U.S. agencies from 2007 to 2009 added up to more than $880 million.

The case follows on from an announcement by HP in August, where it agreed to pay $55 million to settle a Justice Department probe of whether the company overcharged taxpayers through a General Services Administration contract.

While HP was made aware of its illegal marketing practices in “late 2006/early 2007,” the directors allowed the unlawful conduct to continue until Dec. 31, 2009, the shareholders alleged.

Last month the Justice Department and U.S. Securities Exchange Commission joined a probe by the German Public Prosecutor’s Office examining whether HP had engaged in bribery overseas.

“It is painfully obvious that HP’s board has not and will not act as a disinterested and independent check on illegal corporate action, and that to remedy this misconduct, HP’s shareholders need to bring suit,” said the complaint.

The case seeks to recover the False Claims Act fines and repayment of the salaries paid to the directors serving from 2007 to 2009.