Carly Fiorina’s Troubling Business with Iran and Russia

The U.S. government has now joined with German and Russian authorities to investigate whether the Silicon valley giant Hewlett-Packard paid $10.9 million in bribes to win the contract for a sophisticated computer system for the Russian criminal prosecutor’s office ten years ago. Wall Street Journal:

Wall Street Journal:

“The Securities and Exchange Commission is investigating whether H-P committed any civil violations of the Foreign Corrupt Practices Act, this person said, as part of a widening probe into the company’s activities. The U.S. Justice Department, which has jurisdiction over criminal components of the U.S. law, declined comment.
German prosecutors are looking into the possibility that H-P executives paid about €8 million ($10.9 million) in bribes to win a €35 million contract under which the U.S. company sold computer gear, through a German subsidiary, to the office of the prosecutor general of the Russian Federation. The office handles criminal prosecutions in Russia, including many corruption cases.”

WSJ says 3 HP executives have been arrested and released on bail in Germany. Two are former employees, one is currently employed at HP. Raids of Hewlett Packard offices have just concluded in Russia, at the request of German prosecutors. Records reviewed by the WSJ show that the bribery funds were funneled through several shell companies in several countries.

Fiorina is a Republican candidate for U.S. Senate in California, running for the seat now held by Democrat Barbara Boxer.  Fiorina is opposed in the race by California State assemblyman Chuck Devore and former Congressman Tom Campbell.

Since Fiorina was CEO of HP in 2000, the time of the alleged bribery with a foreign country, what did she know and when did she know it? Her official response today is, she still doesn’t know anything about it.

“Carly has no knowledge of these alleged actions,” said her spokeswoman, Amy Thoma. “When she served as the CEO of HP if she had been aware of any illegal or inappropriate behavior by any employee she would have taken action immediately to terminate the parties involved.”

Fiorina also claims no knowledge of another corporate scandal that occurred on her watch at Hewlett Packard.

Last December, the Boston Globe broke the story that Hewlett Packard has been selling its printers in Iran through a subsidiary company since  despite the fact that a trade embargo had been in place against the Iranian regime since 1997. The sales were halted shortly after the business dealings were published by the Globe.

Fiorina has also claimed no knowledge that the approximately $100 million of sales through the subsidiary were coming from Iran. An investigation by the San Jose Mercury News last year showed that Fiorina did know or should have known.

  • “Fiorina in 2003 noted Middle East sales were defying global trends, and, as the Merc notes, HP’s partner there issued a press release saying sales topped $100 million and that “the seeds of the Redington-Hewlett-Packard relationship were sowed six years ago for one market – Iran.”
  • Three of the three HP partners in the Middle East contacted by Christopher Stewart for a story in Portfolio magazine’s August 2008 issue readily agreed to ship printers to Iran. Portfolio notified HP of the incidents, but the company didn’t condemn them, instead refusing comment. Fiorina was gone as CEO at this point, but Portfolio noted that diversion of American products to Iran trough Dubai had been going strong for many years.
  • HP had an office in the Dubai free-trade zones notorious for funneling American goods to Iran, Portfolio reported — so it had ample means to be aware of how its products were being shipped.
  • After the SEC noticed the prevalance of HP products in Iran, it asked the company about the matter, and got back a letter from the company saying its Dutch subsidiary sold $120 million to Iran in 2008.
  • Finally, in January 2009, HP severed ties with Redington Gulf, the distributor that had publicly bragged about its Iran trade six years earlier.”

Fiorina’s competitor in the Senate race, Chuck DeVore, worked for the Reagan administration Commerce department on import issues, and also was an aerospace industry executive. DeVore says Fiorina’s responses on the Iran and Russian deals are not credible.

“The news that Carly Fiorina’s Hewlett-Packard may have engaged in illegal and unethical practices in Russia and Germany is unfortunately unsurprising. We’ve known for some time that throughout Fiorina’s watch, Hewlett-Packard used Redington Gulf in Dubai — named after its co-founder, William Redington Hewlett — as a front company for the circumvention of U.S. export restrictions to the Islamic Republic of Iran. If Carly Fiorina tolerated that level of unethical business practices in the Middle East, it is sadly predictable that she would exercise the same moral laxity elsewhere.
“When confronted with this news, Fiorina will do what she always does: deny knowledge despite having been a famously micromanaging and bottom-line-oriented CEO. Now that she aspires to Constitutional high office, she owes Californians — and herself — something more. It’s the one thing we have yet to see when she addresses her rocky and increasingly questionable corporate past: honesty.”

Fiorina was forced out of Hewlett Packard in 2005 and received $21 million in severance.

Members of the Packard family have endorsed Chuck Devore, claiming Fiorina ran the family business into financial trouble during her tenure.

The Wall Street journal does not have the names of three HP executives who have been arrested and questioned in the matter.

Comments

I have been an admirer of Sarah Palin.  But now, I cannot believe she endorsed Carly Fiorina, who by all accounts lacks integrity.
 

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