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HP pays $16.25m in fraud settlement

Kathleen Hall

Hewlett-Packard is to pay $16.25m (£10m) for alleged fraud, following an extensive investigation by the Federal Communications Commission (FCC) and Department of Justice (DoJ).

The fraud was allegedly committed by the company to win contracts for the governments E-rate program, which funds internet connections in schools and libraries in the US.

The FCC and the DoJ acted on tips from whistleblowers to investigate allegations that contractors working with HP and other companies lavished gifts on Dallas Independent School District and Houston Independent School District personnel in order to get contracts that included about $17m in HP equipment.

Meals and entertainment, including trips on a yacht and tickets to the 2004 Super Bowl, were provided by the contractors to get inside information and win contracts that were supposed to be awarded through a competitive bidding process.

"Broadband is key to our children's 21st-century education," said Julius Genachowski, FCC chairman. "That's why one of the FCC's top priorities is making sure E-rate works to benefit students and libraries. [This] settlement shows the extensive efforts of the FCC and DoJ to protect the E-rate programme from waste, fraud, and abuse, and to deter misconduct in the future."

The FCC will oversee a compliance agreement with HP that will ensure that the company plays by the rules in the future.


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