HP 2014 Annual Report Download - page 168

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Litigation and Contingencies (Continued)
On August 15, 2014, the CPO agreed to the parties’ joint request that the CPO not issue an order
unless and until the parties, with the guidance of the mediator, report to the CPO that their ongoing
mediation has reached a final impasse.
On September 10, 2014, the parties reached an agreement in principle to resolve this matter and
on December 15, 2014, the parties submitted a settlement agreement and time and materials agreement
to the CPO for approval.
India Directorate of Revenue Intelligence Proceedings. On April 30 and May 10, 2010, the India
Directorate of Revenue Intelligence (the ‘‘DRI’’) issued show cause notices to Hewlett-Packard India
Sales Private Ltd (‘‘HPI’’), a subsidiary of HP, seven then-current HP employees and one former HP
employee alleging that HP underpaid customs duties while importing products and spare parts into
India and seeking to recover an aggregate of approximately $370 million, plus penalties. Prior to the
issuance of the show cause notices, HP deposited approximately $16 million with the DRI and agreed
to post a provisional bond in exchange for the DRI’s agreement to not seize HP products and spare
parts and to not interrupt the transaction of business by HP in India.
On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-
related show cause notice affirming certain duties and penalties against HPI and the named individuals
of approximately $386 million, of which HPI had already deposited $9 million. On December 11, 2012,
HPI voluntarily deposited an additional $10 million in connection with the products-related show cause
notice.
On April 20, 2012, the Commissioner issued an order on the parts-related show cause notice
affirming certain duties and penalties against HPI and certain of the named individuals of
approximately $17 million, of which HPI had already deposited $7 million. After the order, HPI
deposited an additional $3 million in connection with the parts-related show cause notice so as to avoid
certain penalties.
HPI filed appeals of the Commissioner’s orders before the Customs Tribunal along with
applications for waiver of the pre-deposit of remaining demand amounts as a condition for hearing the
appeals. The Customs Department has also filed cross-appeals before the Customs Tribunal. On
January 24, 2013, the Customs Tribunal ordered HPI to deposit an additional $24 million against the
products order, which HPI deposited in March 2013. The Customs Tribunal did not order any
additional deposit to be made under the parts order. In December 2013, HPI filed applications before
the Customs Tribunal seeking early hearing of the appeals as well as an extension of the stay of deposit
as to HP and the individuals already granted until final disposition of the appeals. On February 7, 2014,
the application for extension of the stay of deposit was granted by the Customs Tribunal until disposal
of the appeals. On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals
of the Commissioner’s orders. The Customs Tribunal rejected HP’s request to remand the matter to the
Commissioner on procedural grounds, and is scheduled to reconvene hearings on the merits beginning
on April 6, 2015.
Russia GPO and Other FCPA Investigations. The German Public Prosecutor’s Office (‘‘German
PPO’’) has been conducting an investigation into allegations that current and former employees of HP
engaged in bribery, embezzlement and tax evasion relating to a transaction between Hewlett-Packard
ISE GmbH in Germany, a former subsidiary of HP, and the General Prosecutor’s Office of the Russian
Federation. The approximately A35 million transaction, which was referred to as the Russia GPO deal,
spanned the years 2001 to 2006 and was for the delivery and installation of an IT network. The
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