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    | Apr-22-2007 HP, Sun, Accenture accused of bribing(topic overview)CONTENTS:
REFERENCES
The Justice Department said it filed a civil complaint based on a private lawsuit alleging the companies submitted false claims to federal agencies for information technology hardware and services "on numerous government contracts from the late 1990s to the present." The private lawsuit was filed in U.S. District Court in Little Rock, Arkansas, and alleges the three companies made the improper payments to a number of companies with whom they had global "alliance relationships." [1] The lawsuits, originally filed by Accenture employee Norman Rille and another whistle-blower, accuse the companies of creating alliance relationships with dozens of other vendors, giving one another discounts or rebates on products or work for government contracts. The companies did not pass the rebates on to their government clients, according to a DOJ court filing.[2] The U.S. Department of Justice has joined three whistleblower lawsuits alleging that HP, Sun, and Accenture paid and received kickbacks from IT partners in exchange for preferential treatment on government contracts, the DOJ said Thursday.[3] The government joined the complaints after two individuals filed lawsuits under the False Claims Act, which allows whistleblowers to receive a portion of recovered money that is gained illicitly. The suit against Sun also includes accusations that the company made false statements about some of its discounting practices.[4] Under that statute, a private party, known as a "relator," can file an action on behalf of the United States and receive a portion of the recovery. Under the False Claims Act, the United States may recover three times the amount of its losses plus civil penalties. The government filed its complaint in intervention in the matters on April 12, 2007.[5] If the Justice Department steps in and takes over the case, the whistleblower snags 15 to 25 percent of the settlement or judgment. The False Claims Act netted the government some $15 billion between 1987 and 2005, according to a 2006 government report. 64% of that cash money came from cases filed by whistleblowers, who pulled down a cool $1.6 billion for their freelance fraud-fighting troubles.[6] The suits claim that, by failing to disclose the payments and making false statements about sales practices to the government, the companies violated the False Claims Act, a statute that allows the government to seek treble damages.[7] U.S. joins whistleblower case against IT companies, Sun Microsystems Inc. and Accenture alleging that the companies violated federal false claims laws[8] Case alleges that HP, Sun and Accenture submitted false claims on government contracts and had relationships with other businesses that created conflicts of interest.[9] The government charges that instead Accenture made $4 million cash in kickbacks from companies who landed contracts with the government through Accenture's recommendations. The government also charges that Accenture made $26 million by negotiating wholesale hardware deals with vendors such as Sun and Hewlett Packard, then selling them at higher prices to the government -- despite being paid by the government to be its agent.[10] The core allegations in the suits were the same adopted in the DOJ complaints. The allegations follow the trail left behind by charges that were leveled in 2002-2003 against the office automation company Xerox whereby it was alleged that its Indian arm had paid kickbacks to Indian government for bagging contracts.[11] In some cases, the alleged kickbacks came in the form of stock purchase agreements, the DOJ said. The DOJ's complaint asserts that these alliance relationships and the resulting alliance benefits amount to kickbacks and undisclosed conflict-of-interest relationships. "The Department of Justice is acting in this case to protect the integrity of the procurement process," Peter Keisler, assistant attorney general for the DOJ's civil division, said in a statement.[2] The government contends the relationships and resulting "alliance benefits" that were paid amounted to kickbacks and raised conflicts of interest. Hewlett-Packard said in a statement that it is "proud to partner with the government and is confident its business practices are appropriate. "We plan to vigorously defend this action and look forward to demonstrating that HP has done nothing wrong," Hewlett-Packard said.[1] In complaints filed April 12, but unsealed Thursday, federal officials allege that the companies formed alliances and paid the kickbacks to systems integrators, hired by the government to provide independent and objective advice about appropriate hardware and software purchases.[12] In Accenture, HP and Sun's case, two former Accenture employees, Norman Rille and Neal Roberts, filed the original suits accusing the companies of having cozy hidden kickback regimes designed to defraud the government.[6] Millions of dollars of kickbacks were sought, received, offered and paid among the three companies and other technology partners, the DOJ said in a court filing made public Thursday. HP claims its business practices were legal, although it said that about pre-texting.[13] Any rebates vendors receive as part of a U.S. government contract belong to the government, the DOJ said. HP issued a statement saying it is confident its business practices are legal. "We plan to vigorously defend this action and look forward to demonstrating that HP has done nothing wrong," the statement said.[2] An alleged multi-million-dollar kickback scheme involving work on numerous U.S. government contracts touches dozens of technology vendors and systems integrators, according to court documents just unsealed.[14] In one case Accenture received more than $735,000 in payments from IBM for "favourable treatment and influence" on six government contracts between 2001 and 2006, the DOJ filing alleges. Biggish Blue said it was surprised to hear this.[13] Sun said in a statement that the case related to company contracts with the General Services Administration, and sales by Sun resellers to various government agencies. The company said a lengthy government audit had been performed on its GSA contracts, but it had not seen the results.[15] The General Services Administration's Inspector General's Office recently completed a long investigation into whether Sun defrauded the government by failing to honor a contract clause requiring it to give agencies the same discounts it offered favored commercial customers.[4]  Sun declined to comment specifically on the lawsuit but said it is cooperating fully with government investigators. The company "takes pride" in its relationship with the federal government, Sun said in a statement. [2] In a statement, Sun Microsystems said it has fully cooperated with the audit process and will "address the resulting claims in a fair and impartial forum." Hewlett-Packard said it is confident its business practices are appropriate. "We plan to vigorously defend this action and look forward to demonstrating that HP has done nothing wrong," the company's statement said.[12] Under that statute, a private party can file an action on behalf of the United States and receive a portion of recovered losses, the department said. The government can recover three times its losses plus civil penalties. [12] The suits say that, for example, in exchange for help winning government work, the companies paid referral fees to government-contracted systems integrators.[4] The suits center on Accenture, which the government hired to help it evaluate new technology and make sure the government got the right equipment at a fair price.[10] The company's deny any wrongdoing, but in the Accenture case, the government is alleging at least $30 million in fraud, which if tripled comes to $90 million.[6] A DOJ spokesman declined to answer questions about the cases, instead referring to the DOJ filings. Rille and Roberts named several other systems integrators and IT vendors as defendants in their lawsuits. [14] REFERENCES 1. UPDATE 2-US joins payments suit against IT companies | News | Regulatory News | Reuters 2. Update: U.S. DOJ joins lawsuits alleging HP, Sun kickbacks 3. DOJ joins lawsuits alleging HP, Sun kickbacks - Network World 4. Federal Times 5. U.S. Intervenes In Three Whistleblower Suits 6. Threat Level 7. US groups face DoJ 'kickbacks' storm - Financial Times - MSNBC.com 8. U.S. joins whistleblower case against IT companies 9. U.S. joins whistleblower case against IT companies | CNET News.com 10. Threat Level 11. HP, Sun, Accenture accused of bribing - Hardware - News - Tech News - Indiatimes Infotech 12. Federal Government Files Lawsuits | Chron.com - Houston Chronicle 13. HP, Sun, Accenture named in kickbacks case 14. PC World - Kickback Allegations Include Technology Contracts 15. HP, Sun, Accenture accused of offering kickbacks - Platforms & Applications - www.crn.com.au |
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