The news at a glance
HP loses $8.8 billion on a bad deal; BP agrees to record fine for Gulf spill; Corzine blamed for MF Global failure; Rogue trader jailed for seven years; Walmart widens its bribery probe
Tech: HP loses $8.8 billion on a bad dealHewlett-Packard saw its profits for this quarter wiped out because a software company it purchased last year allegedly lied about its finances, said Ian Sherr and Ben Worthen in The Wall Street Journal. HP this week accused executives at British software firm Autonomy of “serious accounting improprieties, disclosure failures, and outright misrepresentations,” and said that the fraud was forcing HP to take an $8.8 billion write-down. There was a “willful effort on behalf of certain former Autonomy employees to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers,” HP said.
The huge loss is yet “another blow for HP, which is struggling to reinvent itself,” said Matt Krantz in USA Today. The size of the write-down “is staggering, given that the $8.8 billion financial hit is nearly as large as the $10 billion HP paid” for Autonomy in August 2011. The deal was considered a blunder then, and it sealed the fate of former CEO Léo Apotheker, who stepped down shortly after. But current CEO Meg Whitman was on HP’s board of directors at the time and approved the deal. “Most of the board was here and voted for this deal,” Whitman said this week. “We feel terribly about that.”
Oil: BP agrees to record fine for Gulf spillBritish oil company BP last week accepted criminal responsibility for the 2010 Gulf of Mexico oil spill and agreed to pay $4.5 billion in fines, the biggest penalty ever levied by the U.S. Justice Department, said Kathy Finn and David Ingram in Reuters.com. Under the settlement, BP will plead guilty to 11 felony counts related to the deaths of 11 workers on the Deepwater Horizon rig, and one count of obstruction for giving Congress false information about how much oil was leaking from the well. The company could still be fined up to $21 billion for pollution violations under the Clean Water Act.
Bankruptcy: Corzine blamed for MF Global failure Republican lawmakers said last week that Jon Corzine’s “authoritarian” management style and risky trading strategies were to blame for the demise of investment firm MF Global, said Dina ElBoghdady in The Washington Post. In a scathing report, the House Financial Services oversight subcommittee stopped short of saying Corzine, a former Democratic senator and New Jersey governor, broke the law when the firm went bankrupt, in October 2011, and $1.6 billion in customer money went missing. They also rebuked regulators for not sharing information that might have prevented the firm’s collapse.
Banks: Rogue trader jailed for seven yearsA rogue UBS trader who lost $2.3 billion last year on risky trades was convicted this week for “Britain’s biggest banking fraud,” said Jane Croft in the Financial Times. Kweku Adoboli was sentenced to seven years in prison for racking up the massive losses, which led to the resignation of UBS’s CEO, Oswald Grübel. Adoboli, who was found not guilty on false accounting charges, claimed that his bosses “turned a blind eye as long as he was making profits.”
Companies: Walmart widens its bribery probeWalmart revealed last week that its investigation into bribery allegations has extended from Mexico to China, India, and Brazil, said Stephanie Clifford and David Barstow in The New York Times. In the spring, it was reported that Walmart’s Mexican subsidiary had paid illegal bribes in an effort to build more stores, and that executives at the company’s Arkansas headquarters suppressed an investigation. The latest disclosure about additional bribery inquiries, made in a regulatory filing, suggests that the company’s concerns about its overseas business practices “are serious enough that shareholders needed to be told.”