Legal Briefing: HP May Have Bribed Russians During Fiorina's Tenure

HP May Have Bribed Russians During Fiorina's Tenure
HP May Have Bribed Russians During Fiorina's Tenure

A daily look at legal news and the business of law:

U.S. Joins Ongoing Bribery Investigation of Hewlett-Packard

Two years ago, German authorities began investigating whether Hewlett-Packard paid Russian officials a $10.9 million bribe to win a $47 million computer contract with Russia's top criminal prosecuting agency, according to The Wall Street Journal. (Ironically, the Russian agency's portfolio includes corruption cases.) The Germans arrested three Hewlett-Packard (HPQ) executives last December, but released them a few weeks later. On Wednesday, Russian authorities raided HP's Moscow offices. And on Thursday, the U.S. government got into the act, with the Department of Justice and the Securities and Exchange Commission announcing that they would investigate -- the DOJ for possible criminal charges, the SEC for civil ones. The Foreign Corrupt Practices Act prohibits bribing foreign officials to win business.

An HP spokesperson played down the investigation
, saying "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."

That timing means that Carly Fiorina was still running HP when the alleged bribery occurred: She took the helm in 1999 and was fired in February 2005. Since she's currently running for U.S. Senator from California, it'll be interesting to see if the investigation becomes a campaign issue. HP has chosen Gibson, Dunn to help it with the American part of the investigation, and Linklaters to help it in Europe.

Quadrangle Settles Corruption Charges With Cuomo; Ex-Car Czar Rattner Still Vulnerable

New York state Attorney General Andrew Cuomo has an ongoing investigation of pay-to-play at the New York Comptroller's Office, alleging state pension fund investments were made based on who paid kickbacks to key comptroller associates such as Hank Morris. So far, Cuomo has recovered $130 million for the pension fund, picked up six guilty pleas and negotiated 15 other settlements.

On Thursday, Quadrangle, an investment firm co-founded by ex-car czar Steve Rattner, joined the settlement parade. To settle charges that Quadrangle paid Morris to get a $100 million pension fund investment, Quadrangle sent $7 million back to the pension fund and $5 million to the federal government, and threw Steve Rattner under the bus: "We wholly disavow the conduct of Steve Rattner ... That conduct was inappropriate, wrong and unethical," the company said in a statement. Cuomo's settlement specifically excludes Rattner, so he's not out of the woods yet.

While Quadrangle's payout was the biggest announced Thursday, it wasn't the only one. Another investment firm, two political consulting groups and one unlicensed placement agent also settled with Cuomo, bringing the amount the pension fund received Thursday to $12 million. Although the investigation has been focused on the Comptroller's Office during former Comptroller Alan Hevesi's tenure, Thursday's settlement with Global Strategies Group, one of the political consulting firms, reveals that current Comptroller Thomas DiNapoli is also facing scrutiny.

Viacom v. Google/YouTube Case Gets Even Nastier

Viacom (VIA) is locked in a nasty copyright struggle with YouTube and its new owner, Google (GOOG), and as I've written in previous columns, neither side looks particularly good. Filings released last month revealed that despite its do-no-evil image, Google was quite aware that pirated content was important to YouTube's success, and at least in its early days, seemed uninterested in protecting the copyrighted material. Viacom's hands also appear less than clean, because at the same time as it was crying about pirated content on YouTube, it was exploiting YouTube's marketing power, including choosing to leave up pirated material, and uploading content it had altered to make it appear pirated.

When the first batch of court documents came to light, I thought Viacom had made a good case about YouTube's early years, but that Google's position had gotten stronger as time went by. Perhaps that's not so after all. Court documents unsealed Thursday reportedly show that as late as 2006, YouTube discussed exploiting its power to protect -- or not protect -- copyrighted material to gain licensing deals with copyright owners. The real question: Why haven't they settled this case?

Key Part of WaMu's Fall: Regulatory Capture

When bank examiners in the field are able to identify serious problems in a timely way and yet both the bank -- in this case, Washington Mutual -- and the examiners' D.C. bosses ignore the field agents, something's wrong: The regulator has been "captured." How does an industry go about capturing its regulator? Well, funding its budget is a powerful lever: In this case, as much as 15% of the bank regulator's budget came from fees paid by WaMu.