HP pays $55m to US government to end kickback case

Vendor settles following allegations it paid off staff at other companies to recommend its products

A fine day: HP has agreed to hand over $55m after being accused of paying illegal kickbacks

HP has reached a $55m (£35.5m) settlement with the US government following allegations its staff paid kickbacks to integrators to ensure they recommended HP products to federal agencies.

The allegations first surfaced in 2004 but HP continues to deny "engaging in any illegal conduct". The US Department of Justice brought charges against HP three years ago, with Sun Microsystems and Accenture also standing accused.

The three firms allegedly offered each other and other tech companies preferential rates and backhanders to recommend products and services to US federal bodies. Accenture and Sun deny any wrongdoing and have yet to reach a settlement.

Today's settlement also includes the resolution of allegations that a 2002 governmental contract for hardware and software was incorrectly priced. The pricing muddle was reportedly because HP provided incomplete information to US procurement body GSA.

In its recently published third quarter results, HP indicated the settlement was likely to impact its quarterly earnings to the tune of two cents per share. Today's news caps a topsy-turvy month for the vendor, during which chief executive Mark Hurd resigned following allegations of sexual harassment and false expense claims.

A week after his departure, Hurd and various other boardroom executives were hit with a lawsuit from the company's shareholders. The top brass stand accused of "gross mismanagement" and the complainants hope to force Hurd to hand back his $12m severance package.