HP to pay $16M to settle e-rate abuse charges

Hewlett-Packard Co. will play $16.25 million to the government as part of a settlement for alleged fraud in the E-rate program, which funds Internet connections in schools and libraries.
The Department of Justice and the Federal Communications Commission has been investigating 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 some $17 million 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.”
Most of the $16.25 million fine will be returned to the E-rate program, and the FCC will oversee a compliance agreement to ensure HP complies by the rules going forward. “The FCC’s compliance agreement with HP ensures that HP will train its employees thoroughly on the FCC’s gift and other E-Rate rules, and provides for audits of HP’s E-Rate business,” said Austin Schlick, General Counsel of the FCC. “If HP fails to monitor its E-Rate activities closely and abide by E-Rate Program requirements, it will face substantial penalties.”