Out-Law / Your Daily Need-To-Know

California's attorney general claims that Hewlett-Packard has hindered state and federal investigations into alleged defects in millions of machines sold by the computer maker and other manufacturers, by hiring as a consultant the same individual who alerted law enforcement about the flaws – and paid him $27.5 million, according to reports by Reuters and Bloomberg.

The dispute involves Dr Philip Adams, a former IBM engineer, who sued HP and other companies in 1998, alleging they sold millions of defective computers to state agencies.

Adams claimed that those computers' floppy disk drives had flaws that could result in the deletion or alteration of user data. Based on Adams' allegations, state and federal officials launched an investigation.

In 1999, Toshiba, which was also investigated in the case, agreed to settle the dispute for up to $2.1 billion. Following the settlement, class-action suits were filed against HP and four other computer makers.

The case soon stopped attracting attention until last week, when court documents revealed that Adams was appointed by HP in 2000 to provide software to fix the flaws.

Although it denied selling defective computers, HP apparently paid more than $27.5 million to license Adams' software fix and prevent further legal action. According to media reports, the California attorney general is now accusing HP of misleading the investigation by not disclosing the deal.

HP has rejected the allegations, claiming it acted "entirely ethically."

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