U.S. DOJ joins lawsuit against HP, Sun, Accenture

Suit alleges that the three companies formed an alliance with vendors and have been giving each other kickbacks on government contracts since the late 1990s.

The U.S. Department of Justice has joined three whistleblower lawsuits alleging that Hewlett-Packard, Sun, and Accenture paid and received kickbacks from IT partners in exchange for preferential treatment on government contracts, the DOJ said Thursday.

[ Analysis:  Scandal could claim many victims ]

The lawsuits, filed in U.S. District Court for the Eastern District of Arkansas, allege that the three companies submitted false claims to the U.S. government on "numerous" government contracts since the late 1990s. The lawsuits, originally filed by Accenture employee Norman Rille and another whistleblower, accuse the companies of creating alliance relationships with dozens of other vendors, giving each other 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.

"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. 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.

Accenture spokeswoman Roxanne Taylor also said the company is "confident we acted appropriately." Accenture will defend itself against the allegations and is cooperating fully with the government investigation, she said.

Sun declined to comment specifically on the lawsuit but said it was cooperating fully with government investigators. The company "takes pride" in its relationship with the federal government, it said in a statement.

A Sun representative did not immediately respond to requests for comment.

Among the more than three dozen IT vendors named as Accenture alliance partners were Cisco, Microsoft, IBM, Dell, and Oracle.

For example, Accenture received more than $735,000 in payments from IBM for "favorable treatment and influence" on six government contracts between 2001 and 2006, the DOJ filing alleges.

An IBM spokeswoman didn't immediately have a comment but expressed disbelief about the allegations.

Accenture received more than $20 million in payments from alliance partners between 2000 and 2006, the DOJ alleged. In some cases, the alleged kickbacks came in the form of stock purchase agreements, the DOJ said in its filing.

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.

The suits were originally filed under the whistleblower provisions of the U.S. False Claims Act. Under that statute, a private party can file an action on behalf of the U.S. and receive a portion of the recovery.

Under the False Claims Act, the U.S. government may recover three times the amount of its losses plus civil penalties. The DOJ filed its complaint in intervention in the matters on April 12, and the complaints were unsealed Thursday.

This story was updated on April 19, 2007

Copyright © 2007 IDG Communications, Inc.

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