Bribery Happens

By Jonathan Weil, BloombergView
Today the American people learned an important lesson about bribery. It can happen all by itself. There’s even a name for this: immaculate corruption. And it works just like the old saw about guns. People don’t bribe, corporations do.

This explains why Hewlett-Packard Co. is paying $108 million to resolve some overseas-bribery investigations by the Justice Department and the Securities and Exchange Commission, while no individuals are being accused of anything. Because no living, breathing people did anything wrong (or at least none whose names we know of). Only Hewlett-Packard did.

Another important lesson our government taught us today is that Russia is corrupt. Who knew? So is Mexico. Poland, too.

The U.S. has laws to prohibit companies from paying off government officials in other countries to win business. We can presume Hewlett-Packard reasoned that the bribes were necessary because its printers, computers and tech services were so inferior in quality that this was the only way it could sell them. And I sympathize completely.

You could even make a semi-coherent argument that Hewlett-Packard had a duty to try to get away with breaking these laws for the sake of maximizing shareholder value. Back in 2000, when the first of the bribes was immaculately conceived, the Justice Department and SEC hardly ever enforced the Foreign Corrupt Practices Act. But then they started enforcing it again. So, practically speaking, it became illegal again to bribe corrupt government officials in Russia, Poland and Mexico. Hewlett-Packard found itself on the wrong side of the thin blue line.

Truth be told, the company’s biggest mistake was not being a bank. Neither the Justice Department nor the SEC has ever used the Foreign Corrupt Practices Act against a bank.

How bad was the conduct in this case? The bribes to the government officials in Poland helped Hewlett-Packard win a contract with the Polish national police agency. In Russia, they helped Hewlett-Packard retain a contract with the federal prosecutor’s office. That’s so bad it’s good. Like I always say, if you’re going to bribe anyone to get a government contract, you might as well get it with the cops.

So now Hewlett-Packard is going through the usual drill of non-remorse. The company’s Russian subsidiary agreed to plead guilty to criminal charges in a federal court in California. Its Polish unit got a deferred-prosecution agreement. And its Mexican subsidiary got a non-prosecution agreement. So the Mexican subsidiary had better watch out, because if it gets caught breaking the law again then it might have to suffer the slightly more severe punishment of a deferred-prosecution deal, like its Polish cousin got.

As for the people who did the bribing? Well, again, that’s the best part: There weren’t any. Because if there were, then the SEC and Justice Department surely would have filed some sort of claims against them. And this way, everyone is much happier. Hewlett-Packard pays its toll without anyone there getting in trouble with the law. The government lawyers get help with their case quotas. And Hewlett-Packard’s tall-building lawyers can claim to be heroes.

Justice has been served.

To contact the writer of this article: Jonathan Weil at jweil6@bloomberg.net.

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