HP must pay out $16.25 million in E-rate fraud settlement

Hewlett-Packard (HP) is to pay $16.25 million to settle a fraud case taken against it by the US Department of Justice (DOJ) and the Federal Communications Commission (FCC).

Allegations of fraud in HP’s participation of the E-rate programme, which funds internet connections in schools and libraries, were reported to the DOJ and FCC, suggesting that contractors working with HP gave bribes to schools in order to secure multi-million dollar contracts.

The case was under investigation, but HP decided to make an early settlement, which involves a payout of $16.25 million, which is technically less than one of the debatable contracts, worth $17 million, that was secured in unfair circumstances. Much of the settlement money will be used to fund the E-rate programme.

HP will also be required to sign a compliance agreement with the FCC, which will see HP actively training its employees on gift laws and the rules of the E-rate programme. It will also allow the FCC to audit HP’s E-rate business and will result in penalties if HP fails to comply with the requirements.

“Broadband is key to our children’s 21st century education,” said Julius Genachowski, Chariman ofthe FCC. “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.”