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HP The Almighty Buck

Did HP Defraud the Canadian Government? 465

Posted by CowboyNeal from the follow-the-money dept.
lightsaber1 writes "In this age of financial scandal in the Canadian Government it's hardly surprising to see that Hewlett-Packard is now being accused of charging the Canadian Department of National Defence for more than $160 million in software, hardware, and labour that was not delivered. The DND is confident it will get the money back, but HP is denying all responsibility, pinning the blame on an error within the DND itself. In all of this it is clear that the Government can lose track of a lot of money easily and even large companies are not above a little fraud now and then."
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Did HP Defraud the Canadian Government? More

Did HP Defraud the Canadian Government?

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  • HP: Invent

  • Fraud? Seems like old times... (Score:5, Interesting)

    by ackthpt ( 218170 ) * on Thursday March 11, 2004 @08:51PM (#8538255) Homepage Journal
    In a company I once worked for was a rather nice fellow who worked in the Accounts Payable department. It was discovered that he would have checks issued for as many times as an invoice arrived. Apparently some vendors noticed this and items were paid for as many as 4 times. That they knew what was going on and didn't report it back suggests ethics is a broad problem. Many refused to return the money once it was revealed they had collected multiple times.

    How the heck the guy didn't have any indication something was already paid I have no clue, but others in the finance department would try to catch as many duplicate checks on the way out as they could. As you might have guessed, the company is long gone.

    How is it that the government spent $160-million, got nothing in return and no one noticed?"

    It happens and not just in the public sector.

    • In a company I once worked for was a rather nice fellow who worked in the Accounts Payable department. It was discovered that he would have checks issued for as many times as an invoice arrived. Apparently some vendors noticed this and items were paid for as many as 4 times. That they knew what was going on and didn't report it back suggests ethics is a broad problem. Many refused to return the money once it was revealed they had collected multiple times.
      Reminds me of that jewish joke:

      Pappa, what is "business ethics"???

      Oh, my son, this is a very important concept. Hmmm, let's see. Suppose a customer left the store and dropped a $20 bill on the floor and did not notice. This is when business ethics comes into play: should you tell your partner or not???

    • Re:Fraud? Seems like old times... (Score:4, Informative)

      by cybergrue ( 696844 ) on Thursday March 11, 2004 @10:11PM (#8538867)
      How is it that the government spent $160-million, got nothing in return and no one noticed?

      DND (Department of National Defence) had a problem a few years back with their accounting system, and ended up paying late charges on almost all invoices because they couldn't process them in time. They have since claimed to have fixed this problem It may be that the guys in DND fixed that problem by not doing enough checking of the accounts before paying the invoice.
      Want to know how bad the account is over at DND. The other defence scandle this week involved some solders on training who had their daily food allowances reduced retroactivly by 2/3. Several of them had to take out loans to repay the money.

    • I gotta a better one READ THIS (Score:4, Informative)

      by Brigadier ( 12956 ) on Thursday March 11, 2004 @10:42PM (#8539084)


      Unamed city in CA, having a unamed noise program that spends over 20 million a year. pays consultant (large nation wide acoustic company) to prepare plans. When the city realizes the plans are riddled with errors and confronts the consultant, the consultant request additional funds because QC. was not a part of their contract. Not only that the contract that the consultant has with the city is time & materials. the consultant by the way is currently requesting more funds to complete the project that they ( a year ago) signed a contract for saying they woudl complete. Yes this is all true and my grammer sucks. But This is happening right now in a Southern CA city near you. moral of the story, get involved with your local municipality and find where your tax dollars are going. Administration doesnt' give a damn if the tax payers dont give a damn

  • Yeh, I'd be pissed off too. (Score:3, Funny)

    by MrRTFM ( 740877 ) * on Thursday March 11, 2004 @08:51PM (#8538257) Journal
    That amount of money should at least cover the maintenance contract to get a teenager in a suit to come and clean the filter on the power supplies of at least 3 mini's.

    Oh, you said HP? Sorry, I thought you meant Data General. Coz, back a few years we used to pay a *hell* of a lot of money just to get a couple of filters cleaned.

    • Oh, you said HP? Sorry, I thought you meant Data General. Coz, back a few years we used to pay a *hell* of a lot of money just to get a couple of filters cleaned.

      Maybe 20 years ago? And you're still grousing about it. Why the fuck didn't you clean the damn filters yourself. I guess you'd rather keep your hands clean, spend the outrageous cash and complain 20 years later.

  • Exchange rate? (Score:4, Funny)

    by Bobdoer ( 727516 ) on Thursday March 11, 2004 @08:52PM (#8538263) Homepage Journal
    $160 million in software, hardware, and labour
    So after the exchange rate, what's that in moose?

    • Re:Exchange rate? (Score:4, Informative)

      by petabyte ( 238821 ) on Thursday March 11, 2004 @09:08PM (#8538402)
      I know thats a joke but it raises a good point.

      $160 Million US is 210 Million CA.
      $160 Million CA is 121 Million US.

      Though, if you've lost over 100 Million, whats another 40 Million between friends. I accept donations :).
      • Assuming it was 160 million canadian, 121 million US: all told Moose meat is about .50$ a pound US if you hunt and prepare it yourself. So thats about 242 million pounds of moose.

  • Huh? (Score:2, Insightful)

    by be-fan ( 61476 )
    I know unrestrained cynicism is the "in-thing" among nerds these days, but this statement is silly:

    "In all of this it is clear that the Government can lose track of a lot of money easily and even large companies are not above a little fraud now and then."

    They can't both be at fault here! I mean, its not physically possible. The Canadian government could not have lost products if HP never gave them any!

    • Re:Huh? (Score:5, Insightful)

      by Otter ( 3800 ) on Thursday March 11, 2004 @09:41PM (#8538600) Journal
      He's saying HP collected money and didn't provide goods -- thus, HP engaged in fraud and the government paid out money without checking whether they had recieved the paid-for items and services.

      Whether it's true I don't have the slightest idea but I don't see what the semantic mystery is.

    • They can't both be at fault here! I mean, its not physically possible.

      Why not? Suppose the government really did give HP more money than HP provided product. Neither of them did anything about it for years anything for years. Therefore parties at both could be at fault for sloppy book keeping, intentional fraud or both.

      It is possible that someone in the middle could have been embezeling the money, and HP knew nothing about it, but that is not the only possibility.
    • What if HP provided half of the services to the CA government and the CA government says that HP provided no services. They CAN both be at fault

      But it's not very likely ;)

  • An interesting difference (Score:5, Informative)

    by Mr. Ophidian Jones ( 653797 ) on Thursday March 11, 2004 @08:53PM (#8538273)
    There are some differences in the Canadian governmental system than American, and buying off our representatives is a bit harder. Not impossible, mind you.

    Our Senate is appointed, not elected, so campaign funding on that front isn't really viable. Although out-and-out bribery could still be a possibility.

    The Prime Minister is the leader of the party with the most seats in the House of Commons, not a separately elected individual, and therefore controls how the party votes.

    The ethics minister (theoretically) is a watchdog to prevent abuses of power or introducing bills based on the needs of special interest.

    Add into this that each MP has limited power, based on the fact that their ridings are relatively small compared to US electoral areas (population-wise, I'm sure many of the geographical areas are quite large), and it would take a very concentrated effort to garner enough support through bribery and financing to make a dent.

    Of course, this is all from the deep recesses of my high school social science memories, so I could be a bit off.
    • Our Senate is appointed, not elected, so campaign funding on that front isn't really viable. Although out-and-out bribery could still be a possibility.

      Important to note that the Senate is also completely useless.


      The Prime Minister is the leader of the party with the most seats in the House of Commons, not a separately elected individual, and therefore controls how the party votes.
      The PM has some control but not complete. That was one of the biggest problems when Cretien was on his way out and liber

      • Important to note that the Senate is also completely useless.

        Completely useless? I would tend to disagree. From what I remember of high school history, the Senate is meant primarily as a "check" on what the House of Commons passes. The idea is that Senators are *not* elected, do not have an expiring term, and are not part of a party so that their decisions are not influenced by politics -- they are supposed to be appointed, respected members of society (which is not always the case, unfortunately). In an

        • I agree with the concept of the Canadian senate, the problem is that it has become little more than a spellchecker at best. Perhaps if a government came in and tried to dismantel our democracy than it might show its use by voting down the offending laws (as long as the party doesn't have the 2/3 majority necessary to overrule the senate). But when considering the kinds of laws that corporate lobbying would get passed the senate is never going to do anything do disagree with the government.
        • Completely useless? I would tend to disagree. From what I remember of high school history, the Senate is meant primarily as a "check" on what the House of Commons passes.

          Yeah, this is what they tell us in highscool, the whole "school of sober second thought" line I heard from grade eight all the way through high school.

          On reflection, after seeing politics in action for a number of years, I think that whole line was just propaganda. Occasionally the Senate may come up with some useful ideas, but in gener

        • The idea is that Senators are *not* elected, do not have an expiring term, and are not part of a party so that their decisions are not influenced by politics -- they are supposed to be appointed, respected members of society

          How on earth does this shield them from being influenced by politics? They have accountability other than to the democratically elected benevolent dictator de jour.

          You also seem to fail to realize that public opinion is meaningless since we (Canadians) have no ability to recall o

      • Re:An interesting difference (Score:2, Interesting)

        by Anonymous Coward
        Important to note that the Senate is also completely useless

        Not Quite. I dont remember who it was but one senator went on a hunger strike to protest some government program cut. He just lay on a mat in the senate entrance and drank only water. after a few weeks the government caved in.
    • ...And the Governor General and the Queen are even further removed from party politics than those you mentioned. (No Canadian has the $$ to bribe the latter!)

      What we have had, however, is a five-party situation in which the right-wing vote is regionally split into three (a Western party, an Eastern English party, and an Eastern French party), which means the Liberals have known for a few elections in a row now that they're the only game in town. (The fifth party, the socialist NDP, is still deemed too le
    • The main difference is that the Prime Minister of Canada has an enormous amount of power (proportionately) compared to the President of the USA. Consider, the PM:

      - can appoint and dismiss cabinet members without parliamentary approval
      - can appoint federal judges, including supreme court justices, without approval
      - can appoint senators without approval
      - cannot be removed or impeached by parliament without also causing the collapse of the government

      In a majority government situation (which is the rule, not
    • Also, with this coming Federal Election, all Parties which recieve more than 5% popular vote will be given funding. $1.?? per vote per year for the duration of that government.

      The reason is simple, to make them less reliant private donations.

  • What? (Score:5, Funny)

    by Malicious ( 567158 ) on Thursday March 11, 2004 @08:55PM (#8538289)
    As a red blooded Canadian, I have only one question to ask.

    Who gave the Canadian Department of National Defence $160,000,000?

  • The PM of Canada had better have something to back that up with. That's a very serious allegation to make, especially against a multinational corporation or even its contractors. Will the FTC play a part in the investigation?
    • Which allegation in particular are you referring to? If it was something spoken in the House of Commons, he is protected by parliamentary privilege [parl.gc.ca] from any action or libel.

    • Insightful My Ass... (Score:3, Informative)

      by windside ( 112784 )

      "It is very clear that it is going to take all of the actions to recover the monies," Prime Minister Paul Martin told reporters after a cabinet meeting. "I've met with [Defence Minister] Mr. Pratt. He's been in contact with the authorities and we will be doing everything we can."

      That's the only quotation in the article attributed to PM Paul Martin. Unless I'm really missing something, it's fairly benign and not the least bit libelous.

      I have two bits of advice for you, Mr. Gary:

      1. Read the fucking art

  • Large companies and fraud (Score:3, Funny)

    by Rick Zeman ( 15628 ) on Thursday March 11, 2004 @08:59PM (#8538327)
    "...even large companies are not above a little fraud now and then."

    Seems like lots of large companies these days seem to specialize in fraud. I won't mention Halliburton or anyone else accused of defrauding the US government.
    • Why stop there?, Microsoft, Exxon-Mobile, Chevron-Texaco, Boeing, Lockheed-Martin, hell It would be easier to name the one that don't. One hell of a lot shorter list. All of which donate the max to BOTH political parties every year, not just election years.

  • Looks more like a govt messup... (Score:4, Insightful)

    by xot ( 663131 ) <`moc.liamg' `ta' `htaedeligarf'> on Thursday March 11, 2004 @09:01PM (#8538340) Journal
    I would lay my money on this being a govt screwup rather than HP fooling them.Theres no way a big corp like HP would fool a prospective HUGE customer like the canadian govt and charge them for something that they didnt deliver.(and get caught!)
    The world around govt's have know to screw things up due to the sheer laziness and absence of co-ordination between govt departments.Looks like one desk jockey for got to enter a few bills into the accounting system :-)
    • You'd think that, and you might be right. Only the accountants will be able to tell. It's simple really:

      * who submitted the invoces?
      * what checks were issued and when?
      * who cashed them?

      If the RCMP and the auditors can find this information, then it'll be fairly simple.

      However, there are lots of situations where the paper trail was destroyed. If someone inside the government was printing fake invoices and submitting them, then HP would be in the dark as to the invoices, which seems to be the case here.

      It

    • Re:Looks more like a govt messup... (Score:5, Informative)

      by El ( 94934 ) on Thursday March 11, 2004 @09:12PM (#8538422)
      Right. And there is no way a big company like Oracle would fool a prospective HUGE customer like the California government and charge them for something they couldn't use like 270,000 licenses for their 230,000 employees, only a quarter of which actually needed to access a database... and yet they did! [theregister.co.uk] Now, HP has a slightly better reputation to uphold than Oracle, but still, I wouldn't put it past them. (By the way, doesn't CA (California) have a larger government budget than CA (Canada)?)
      • There is a significant difference between selling you something you don't need but shipping the product to you and selling you something and never getting the end product.

        Oracle was acting like a cars salesman (want that clearcoat protector), end of the day you still got the car. They are accusing HP of failure to physically deliver something which was paid for (i.e. never getting the car from the salesman).
        • >There is a significant difference between selling you something you don't need but shipping the product to you and selling you something and never getting the end product.

          Um... 75% of staff don't need to use Oracle. They didn't recieve the product.

          And besides, the fact is that someone paid an insane amount of money without someone questioning it.
      • The big difference is that what Oracle did was unethical, but legal and what HP is accused of doing is criminal.

        The first kind you get to laugh and say "Ha, ha!" while the second kind you have the Royal Canadian Mounted Police seize your assets and take you to the Royal Candian pound-me-in-the-ass prison.
        • What Oracle did is only legal if you buy the assertion that certain California state employees are too stupid to count the number of employees before ordering software, and that they weren't bribed or encouraged by Oracle in any way to over-order. Having worked for the Oracle Marketing department and having observed first hand them billing customers for work that was never done, I find that very, very difficult to beleive.
      • California 2003-2004 state budget: $165 billion US
        Canadian Federal Government budget 2003: ~$144.58 Billion US

        I looked at the California budget summaries [ca.gov] for the last couple of decades and was shocked. WTF has been going on in California that the state budget has increased 65% between 1997-98 and 2003-04?

        Also, when you consider that the Canadian federal government budget is paying for a hell of a lot more services (including health care - the bulk of medicare funding still comes from the federal governme

        • Population of California: 35.4 million
          Population of Canada: less than 32 million

          If the California government was was providing its citizens all the same services that the Canadian goverment was providing its citizens, these budget numbers would not be out of line. But they are not, so there must be something seriously screwed up about California. But then, that's one of the reasons I moved from California to Oregon.

  • Black and White Case (Score:5, Insightful)

    by fembots ( 753724 ) on Thursday March 11, 2004 @09:01PM (#8538344) Homepage
    If HP did receive the payment, but failed to deliver the goods, then isn't it clear who's to blame?

    Imagine if your client mistakenly paid your company $2,000 extra, do you

    (1) keep quiet?
    (2) ask what that $2K is for?

    One of my clients has a habit of overpaying the bill, because it is always late in paying, thus when the next invoice (with 2 months balance) arrives, they then paid the 1st invoice, and the 2nd invoice. I have to tell them that, and hold the credit for the following month(s).

  • Canada has a department of defense? (Score:5, Funny)

    by Anonymous Coward on Thursday March 11, 2004 @09:03PM (#8538361)
    Why the hell do they need that? It's not like anybody hates Canada. I mean, why do you think US citizens put maple leafs on their backpacks when they travel around Europe?

    The US - yeah, we need a big defense department the way we go around pissing everybody off. But not Canada. They're like a harmless little mouse.
    • Quiet probably we have the US to fear.

      And this isn't an I hate th US post. Rather, the US would feel compelled to protect their neighbour against any foreign invader.

      If, however, at some point in the future, our Great Protector needed something we had badly enough, they would probably end up with it, through pressure or other means.

      Either way our military is more for show in the form of 'doing our part' than as any real World force.

    • Re:Canada has a department of defense? (Score:5, Informative)

      by gobbo ( 567674 ) on Thursday March 11, 2004 @10:12PM (#8538876) Journal
      We remember 1812 [galafilm.com] and 54/40 or fight! [wikipedia.org], believe me. Deep down, especially among those canadians who don't have deep ties (family, jobs, etc.) to the U.S., we're just waiting for the tanks to roll across the border and secure oil and water pipelines.

      OK, maybe not. But we have the largest coastline in the world, and we have alliances with other nations that lead to obligations overseas.

      Then there's the national role in "Aid to the Civil Power [cda-cdai.ca]" -- which means that if there's unrest in a region, like the Oka crisis [archives.cbc.ca] or the October crisis [cbc.ca], they want to be able to roll in and maintain that appearance of canadian civility. Actually there's a lot more tension in this big happy nation than outsiders realize, especially since the conquest of the First Nations [kstrom.net] isn't complete. In other words, the military unfortunately seems to be primarily there to keep us in line.

      That said, chances are that the bored military administrators screwed up and HP took huge advantage of it.

    • Why the hell do they need that? It's not like anybody hates Canada. I mean, why do you think US citizens put maple leafs on their backpacks when they travel around Europe?

      The US - yeah, we need a big defense department the way we go around pissing everybody off. But not Canada. They're like a harmless little mouse.

      I hate responding to a troll but when it's +4 Informative I'll make an exception :)

      Ignoring the many peacekeeping missions we partake in, a military (no matter how anaemic) is essential for a

  • even large companies?? (Score:5, Insightful)

    by spazoid12 ( 525450 ) on Thursday March 11, 2004 @09:07PM (#8538394)
    and even large companies are not above a little fraud now and then

    Wow, that's alarming.

    I thought only the tiny puny mom-n-pop companies like Global Crossing and Enron had fraud problems.

  • Recursive court case? (Score:5, Funny)

    by Tablizer ( 95088 ) on Thursday March 11, 2004 @09:15PM (#8538447) Journal
    Gov: We want our money back for the stuff you didn't deliver.

    HP: It is too late. You waited too long to ask.

    Gov: But we didn't have the software and servers to track stuff, and so didn't know fast enough.

    HP: Well, why didn't you get such a computer system?

    Gov: Because you haven't delivered it yet.
  • Maybe HP is now reselling Software Assaurance to the DND?

    In which case, its upgrade protection, not outright theft. Oh, wait.....

  • I'll bet against the DND (Score:5, Interesting)

    by Linegod ( 9952 ) <pasnak AT warpedsystems DOT sk DOT ca> on Thursday March 11, 2004 @09:20PM (#8538481) Homepage Journal
    After 17 years in the DND, I'll bet against the DND in this battle. A Defense WAN ripped off from the Reserves (and then re-implemented incorrectly), Admin Clerks and Truckers in charge of IT resources, zero to none knowledge of networking, an Officer corps that believes sending email means that you are an 'e-business' and a R&D section that wonders why it's so difficult to implement Netbios nationally.

    Top that off with a mentality that everything and everything has to run through either an outside consultant or a 10 year contact with a 'Quebec company' (which only means that they have a place in Quebec to send the cheques), and you have a recipe for disaster.

    HP 1, DND 0.

  • Carly Fiorina and Triumph the Dog could be a comdey/larceny duet.

    Sitck it to Canada, guys! Rah, rah, rah, siss, boom and so on!

    What do you mean "How do you tell Carly and Triumph apart?"

    Ooooo! POW!

  • Coverage of this story on CBC and Radio-Canada (Score:5, Informative)

    by saforrest ( 184929 ) on Thursday March 11, 2004 @09:27PM (#8538519) Journal
    Here's the The CBC article [www.cbc.ca] about this story, and here's the

    Radio-Canada [www.src.ca] story (in French, of course).

    By the way, I'm quite impressed with Radio-Canada's record at scooping its English equivalent. This story was available on src.ca a good few hours before it was on CBC. A good excuse to practise my French.

  • Golden toilet seats? (Score:3, Interesting)

    by mveloso ( 325617 ) on Thursday March 11, 2004 @09:39PM (#8538584)
    A closer reading of the article shows something odd:

    HP suggested that the dispute stems from a defense department request for the company to process invoices for suppliers, whose work HP knew little about.

    "DND's instructions to HP were to process invoices for these suppliers, although the nature of the work being performed was, in many instances, never disclosed by DND," HP said in a statement.

    This implies that its a black billing project that government auditors stumbled onto. Black billing (I'm not sure what the real term is) is when you fund stuff off-budget by inflating other parts of your budget.

    The $500 toilet seats back in the day weren't really $500, it's just some other government agency with an acronym as its name was getting $450 of that. This sounds like the same kind of thing...

  • Are you pondering what I'm pondering... (Score:5, Funny)

    by Ilan Volow ( 539597 ) on Thursday March 11, 2004 @09:40PM (#8538592) Homepage
    If Carly Fiorina becomes Martha Stewart's cell mate, can we expect some tasteful lavendar-scented gingham-pattern HP boxes in the near future?

  • top of the food chain (Score:5, Insightful)

    by Doc Ruby ( 173196 ) on Thursday March 11, 2004 @09:43PM (#8538615) Homepage Journal
    "even large companies are not above a little fraud now and then"

    Large companies are above nothing, but they don't commit fraud - the people who work there do. The bigger the company, the less accountable anyone usually is, especially in the billing bureaucracy (ironically staffed by "accountants"). And the bigger the company, the more valuable the "mistakes" which can be pulled off, and accumulated. When I worked for Northern Telecom in Toronto, they failed to pay my tiny consulting company over C$50K, out of C$300K, that they owed us for over 6 months (after the latest allowed pay date). They wasted $Ks of our management's otherwise billable time in the 1990s bubble, making us chase their accounts-payable people around all of North America. And since their bureaucracy was so distributed, no one cared if we stopped working on our deadline until they paid us, so we would just have lost the gig and any leverage on getting paid. To see how consistent this is, consider that from the first week on the project there were career NorTel managers, helpfully reminding me that NorTel commonly pulled that kind of crap, and kept the $Ms in interest on late payments, as part of their profitability. And that was the pattern of most of the larger corporations we had as clients. Smaller companies' billing problems could be dealt with directly, with decisions made by a single person, so turnaround could be swift. Imagine how long it took the Federal Canadian and Ontario Provincial governments to pay us the $10Ks they owed us: years.
  • even large companies are not above a little fraud now and then

    Have they been convicted of fraud then? You're sure this isn't a mistake, incompetence, whatever? It really is fraud?

    What brilliant insight allowed you to interpret an accusation as proof that "a little fraud" took place?

  • There should be a poll, which big software/tech/IT company has the largest reputation for being unethical.
    While I'm pretty sure I know who would finish first given sentiments around here, I'm curious about the others rankings.
  • Now, as a Canadian taxpayer, I have to decide whether I'm being hornswaggled by the Canadian government or the Hewlett-Packard corporation. That is a tough call. I am feeling mighty tender after the numerous scandals which have come to light recently, so I guess it doesn't make much difference. When I read last summer that the CEO of H-P (Ms. Fiorentino?) was paid in excess of $100 million my thought was that you don't make that much money for doing anything honest. That's a lot of money to misplace though,

  • HP is investigating this themselves (Score:4, Informative)

    by codemachine ( 245871 ) on Thursday March 11, 2004 @10:35PM (#8539031)
    Check out the CBC story [www.cbc.ca] about this scandal. HP claims that the Canadian government is actually a victim of fraud from someone in the DND. Given the other scandals in this government, I wouldn't be all that shocked.

  • I think the record will clearly show (Score:5, Funny)

    by Greyfox ( 87712 ) on Thursday March 11, 2004 @11:30PM (#8539396) Homepage Journal
    That two ink cartridges were, in fact, delivered.

    Hey what do you want for $161 million?

  • And if they find HP not responsible... (Score:3, Insightful)

    by saskboy ( 600063 ) on Friday March 12, 2004 @02:14AM (#8540494) Homepage Journal
    Canada can still easily investigate why HP charges $40 for a printer with a cartridge, yet $50 for a new cartridge. I'm sure they can find that to be against the law somehow... maybe an environmental one.

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