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Hewlett-Packard probe roils California U.S. Senate race

SEC and others are investigating whether company executives paid bribes to win a lucrative foreign contract while under the leadership of GOP candidate Carly Fiorina.

April 20, 2010|By Seema Mehta, Los Angeles Times

An international investigation of alleged misdeeds by Hewlett-Packard executives while the company was headed by Carly Fiorina is roiling the U.S. Senate race in California, where Fiorina is among the front-runners for the Republican nomination.

The U.S. Securities and Exchange Commission, the U.S. Department of Justice, and German and Russian authorities are investigating whether executives with the company paid nearly $11 million in bribes to win a $47.5-million contract in 2003 to sell computers through a German subsidiary to Russian prosecutors, the Wall Street Journal reported last week. Such a move would violate the Foreign Corrupt Practice Act, which prohibits U.S. companies from bribing foreign officials.

The actions are alleged to have taken place while Fiorina was Hewlett-Packard's chief executive. Fiorina, who along with former Rep. Tom Campbell has been at the top of pre-primary polls, denied knowledge of wrongdoing.

"I had no knowledge of any of these allegations," she told Northern California radio station KQED-FM on Friday. "I certainly welcome, as I'm sure the company does, I welcome the government's investigation. I mean, these are serious allegations. I have a long track record of firing people who are engaged in illegal or unethical behavior. And certainly had this occurred and I had been aware of it, I would have done the same."

The questions about the sales deal with the Russians highlight a key challenge facing Fiorina in her first run for elected office. She is running as the common-sense candidate whose corporate experience would provide much-needed skills in Washington, D.C. But that narrative glosses over the facts that Fiorina's six-year tenure at Hewlett-Packard was controversial and that she was fired in 2005.

The company, which until now has not made a public statement in the Senate race, defended Fiorina.

"To suggest that Carly Fiorina, or any other senior executive in Palo Alto then or now, was knowledgeable of these alleged activities is wrong and not supported by the facts," a Hewlett-Packard spokesman said.

Fiorina's rivals in the race, however, note that this is not the first time allegations of improper behavior under her watch have surfaced. Previously, concerns have been raised about Hewlett-Packard selling printers through a Dubai-based subsidiary to Iran, which is subject to a trade embargo. The company was not charged with wrongdoing, and Fiorina has said she was unaware of the sales at the time.

Orange County Assemblyman Chuck DeVore, who is also seeking the GOP nomination for the U.S. Senate seat, said he was skeptical that Fiorina would not have known about either situation.

"When confronted with this news, Fiorina will do what she always does: deny knowledge despite having been a famously micromanaging and bottom-line-oriented CEO," he said. "Now that she aspires to constitutional high office, she owes Californians — and herself — something more. It's the one thing we have yet to see when she addresses her rocky and increasingly questionable corporate past: honesty."

seema.mehta@latimes.com

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