A somewhat murky chapter in EDS/HP’s past has officially closed now the computer giant has paid $55m to the US Department of Justice.
HP first made moves to kill off the issue back in April and finally cut a deal with DoJ this summer; this week’s announcement basically just gives us a final bottom line price for making it go away.
That issue is kickbacks – something HP now can officially state it does not admit to ever having done and can we all now shut up about it, please.
The kickback scandal has been hanging over HP since 2004 (though a related case that was brought in dates even farther back, from 2002) and its dissolution will no doubt be of great cheer to the company’s interim CEO, Cathie Lesjak.
The case also brought in such luminous IT industry names as Accenture and the former Sun and centred on allegations that, shall we call it an incentive scheme?, operated where EDS (as was) would reward firms that guaranteed its place in contracts with Uncle Sam as a sub-contractor.
Though highly illegal, this purported practice would of course be very reassuring for any managers looking to dependable sales pipeline.
Such alleged fiscal inducements paid to secure US government contracts would have been actionable under the US ‘False Claims Act’ and had they happened, would have centred on HP paying more to firms that used it as a sub-contractor to guarantee its sales pipeline.
A few things to note here, I think. One, this is not really fair on HP as it stemmed from possible actions of companies that its current leadership had no involvement in. It’s really best for everyone, including partners, HP staff and customers, that the deck is cleared and that this one goes away.
But does anyone seriously think such things happen once in Blue Moon Month in Faraway Land? Big government contract work has always been very important to the computer industry but it became a lifeline/crutch post Dot Com Bubble, let’s face it. For a while there – and soon, how amusing we will find this statement – the public sector was the main growth engine of IT, certainly in the West (to use an old-fashioned phrase that probably deserves a revival).
As a result, some people got hooked on nice fat cheques for contracts that never finished. Those days are gone, or are in the departure lounge at least; but the temptation was surely too strong for most humans, let alone computer company salesmen (that last bit was fond ribbing, note).
So I am glad HP has deleted this from its to-do list and let’s all agree that the days of big firms locking in lucrative work in a non-competitive, free hand of the market way are behind us for good.
Now let me get back to Faraway Land. I have to make a meet. It is the 12th of Never, after all.
Image courtesy of andrewrennie, Flickr, CC Licence.
