New Oracle Co-President Mark Hurd is becoming a regular magnet for
litigation.
Hurd, who caused a ruckus when he left his CEO
job at Hewlett-Packard under questionable circumstances, is one of a dozen
defendants named in a lawsuit brought Oct. 19 by a Midwest-based pension fund
regarding kickbacks he and others are alleged to have paid to key influencers
to earn business for HP.
The HP corporation, its board of directors, and 11 of its current and former
officers—including then-CEO Hurd—are being
sued by the Saginaw Police & Fire Pension Fund, which contends that the
company violated the False Claims Act and anti-bribery statutes by paying
"influencer fees" to government contractors and vendors in order to
garner federal contracts.
In a suit filed in federal court in San Jose, Calif.,
the pension fund—a large HP shareholder—alleges that Hurd breached his
fiduciary duty to shareholders by allowing practices at HP that were found by
federal regulators to have violated the False Claims Act and Anti-Kickback Act.
The suit alleges that Hurd banked about $97 million in compensation as a result
of deals that involved paying influencers.
The pension fund claims that HP board members also abandoned their duty to
shareholders by "rewarding Hurd for his conscious decision to allow HP
employees to engage in illegal activity," costing the company tens of
millions of dollars in fines and tarnishing its reputation, according to court
documents.
The plaintiff estimates that HP recorded payments of more than $880 million
from government contracts between 2007 and 2009 and suggested that the
company's government-contracting business may now be threatened by the charges
leveled against it by the U.S. Justice Department.
DOJ keeping busy with IT companies lately
The DOJ has been on the warpath against IT companies in the last several years,
finding cause to penalize such companies as Microsoft, EMC,
Sun Microsystems, HP, Accenture and others for illegal business
practices. In fact, the DOJ
is currently suing Oracle for allegedly overcharging government agencies.
The Oct. 19 lawsuit against Hurd and HP asks for unspecified damages, as well
as the return of compensation earned by Hurd and other defendants.
Hurd was forced to resign from HP Aug. 6 following allegations of sexual
harassment and a subsequent financial cover-up involving an actress employed as
a contractor by HP for special events.
Thirty days after he left HP, longtime friend and Oracle CEO/co-founder
Larry
Ellison hired him to become co-president at Oracle with Safra Catz. Ellison
criticized the HP board, calling its move to oust Hurd as "the worst
personnel decision since the idiots on the Apple board fired Steve Jobs many
years ago."
A few days later, HP retorted with a civil lawsuit against Hurd, accusing him
of violating a non-competition agreement in his HP contract by joining Oracle a
mere 30 days after accepting a $40 million severance package. The two
companies, which partner on a number of customer projects, settled
the matter out of court 13 days later, and Hurd gave up a large portion of
his severance.
Oracle and HP representatives declined to answer questions about the Oct. 19
lawsuit.
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