After the closure of the Hewlett-Packard office in Ukraine, local managers organized a scheme to promote products with luxury resorts, expensive gifts, and straw individuals, which resulted in the Americans losing almost two million dollars.

This is a translation of an investigation published in the EP.

Corruption is usually associated exclusively with public officials and politicians. However, in the world of international corporations, which are increasingly resembling states in terms of their scale, management fraud is no different from abuse in the world of officials. Many of these stories involve Ukrainian top managers, who cause great reputational damage to the country.

In 2020, the American tech company Hewlett-Packard (HP) sent a letter to the Ukrainian communications holding Atlantic Group demanding to explain inaccuracies in reports on marketing activities ordered by the tech giant.

HP’s audit service analyzed reports on 175 events from 2018 for $2.1 million and asked to justify $1.8 million in expenses. In the request, it cited examples of identical photos from events in different reports, questionable bills, and possibly fake signatures.

This letter set off a domino effect that had painful consequences for many players in the Ukrainian computer and advertising market. Perhaps no one would have learned about this if one of the contractors of the aforementioned communication holding, Viktor Hurzhiy, who supported their marketing activities in Ukraine, had not brought this story to light. He was not paid for his work.

Hurzhiy shared with the EP data from reports and budgets, communications of HP’s Ukrainian team managers, which cover their work five years before the start of the great war. Although this story concerns only private funds and took place several years ago, it reveals the approaches of an international organization in the local market. Approaches that are at least unacceptable in developed countries, and at most illegal.

HP Inc. is a public company listed on the New York Stock Exchange (NYSE). Violation of rules and abuse of position by the company’s employees can cause direct (financial) and indirect (reputational) losses. In addition, a similar story happened to HP in 2014, when the tech giant agreed to pay $108 million due to corruption of its subsidiaries in Russia, Poland, and Mexico. At that time, HP’s foreign divisions bribed officials to obtain lucrative contracts.

How HP’s work is organized in Ukraine

In 2014, Hewlett-Packard split into two structures: HP Inc. and Hewlett Packard Enterprise. After that, the former one closed its representative office in Ukraine. However, this did not mean that the company would cease its operations in the local market. Employees of the local office were offered to move to Warsaw and join the Polish office. Some of the employees did so, continuing to work on the Ukrainian market.

Those who remained in Ukraine were hired by Visage Advertising Limited, a Ukrainian subsidiary of the Visage Media marketing agency with which HP Inc. had a contractual relationship. These employees became known as “HP champions.”

The participants of this story are the following people.

The Ukrainian HP team or “HP champions”. Its members were part of the ECG Eastern Central Group region, which was responsible for Ukraine, Georgia, Belarus, Armenia, Moldova, Uzbekistan, and Azerbaijan. “HP champions” are non-staff employees of the American company. Those who moved to Warsaw after 2014 remained on the HP staff.

Both of them represented HP’s interests in the Ukrainian market: they were responsible for sales of the company’s products, contacts with partners and customers, marketing and advertising.

According to the rules of the American corporation, members of the Ukrainian HP team did not have access to project budgets, did not operate with them, did not negotiate with contractors, and did not report on the implemented measures to the European office for the contracted work.

The European HP office, in cooperation with the Ukrainian team, allocated and coordinated budgets for their marketing projects, received reports from contractors, namely Visage Media LTD, and monitored the company’s performance in Ukraine.

Visage Media LTD, a marketing service agency and key contractor for HP in Ukraine. When the Ukrainian HP team received budget approval for an activity from the European office, Visage Media LTD had to take over its implementation: negotiate with contractors, coordinate details with the Ukrainian team members and submit final reports to the HP system, including copies of paid invoices.

After acceptance of the reports, Visage Media LTD received funds for them to cover expenses. The principle of interaction between HP and Visage Media LTD did not involve manual management and access to funds by HP representatives. Although the “HP champions” were part of the staff of the Visage Media LTD subsidiary, they did not have access to funds. It was a classic outstaffing to pay salaries to the “HP champions” after the office was closed.

The owner of Visage Advertising Limited, which was nominally registered as the “HP champions,” was the Cyprus-based company Visage Media LTD, which was owned by V.A.A. LTD. The latter is part of the Atlantic Group holding, to which the corporation’s auditors have sent claims.

Cooperation under an agreement between the American corporation HP and Visage Media LTD can be described by the following example. One of the “HP champions” contacts the American office with a request to create, print, and distribute flyers with information about the company’s new products to increase sales.

Once this request is approved, Visage Media LTD, as the contractor, begins to implement it, negotiating with contractors and coordinating details with HP’s European office. After the work is completed, Visage Media LTD prepares a report and uploads it to the HP reporting system. Once the work is confirmed, the HP office sends money to the agency. In other words, the role of the Ukrainian office, the “HP champions,” is minimal: to create a request.

The funds that European HP office sent according to the reports received were mainly used to finance advertising activities, stimulate activities for partners and customers, maintain a team of promoters and merchandisers in Ukraine, and pay salaries to the “HP champions”.

However, HP’s local team in the Ukrainian market worked according to a different scheme. Instead of only supervising the work of Visage Media LTD from the customer’s side, the Ukrainian HP team independently approved budgets and plans and reported on the progress of the work to the American office.

In other words, representatives of the regional office were simultaneously customers and executors of marketing campaigns, communicated with contractors, and prepared reports for the head office. Moreover, based on the electronic data received by Visage, it performed formal duties, such as processing documents and transferring funds.

Visage’s representatives did not even have access to information about the fulfillment of their contract. Reports were submitted for them by HP employees. Visage Media LTD only kept the “HP champions” on staff and paid their salaries.

An employee here and there

On the Ukrainian market, until 2021, almost all communication with contractors from HP was conducted by Kateryna Hurenko, who introduced herself as the marketing manager of the American company. In 2015-2021, she ordered and approved payment for most advertising campaigns and related work on behalf of HP.

Until 2015, Hurenko worked as a marketing manager at HP’s Ukrainian office. After its closure, she and her colleagues were transferred under the staff outsourcing program to the “HP champions” in the structure of the company owned by Visage Media LTD. In fact, she continued to perform the functions of HP’s marketing manager in Ukraine.

Entertainment, Las Vegas, and traveling to islands. How HP's Ukrainian managers luxuriated at the expense of the global office


A letter sent by Kateryna Hurenko, where she uses company logos, corporate mail, and is signed by an HP employee

In all correspondence with contractors, Hurenko introduced herself as HP’s marketing manager. Interestingly, for Visage Media LTD, she also acted as a representative of HP, who manages the processes in Ukraine. However, her real powers were much greater than those of an ordinary representative of an American company.

According to an EP source close to the team of “HP champions,” Hurenko was both a customer from HP and a contractor at Visage Media LTD. When negotiating with contractors, she agreed on payments and reported to the European office. In other words, a situation emerged where the manager of HP in Ukraine took over the duties of a contracting agency and had access to the budgets of all activities.

Hurenko’s status as a simultaneous employee of both companies was clear to all members of the HP team working for the Ukrainian market. At the joint events of the American company, she was introduced as HP’s marketing manager, but, unlike other “champions,” she was never allocated a separate budget within the company. According to Visage Media, her salary was close to the minimum in the country.

Saved means earned

The scheme described above allowed the local HP team to independently approve and plan budgets, determine where and how to spend them, and then prepare reports on them for the company’s headquarters.

Corporate corruption is the unlawful use of power or influence by employees or officials of a company for personal gain. It can take many forms, including fake expenses: overstating expenses or creating false documents to obtain an improper benefit.

In order to “save money,” Hurenko verbally agreed with contractors on understating the cost of work in some projects, for which she later reported to the SB at full price. In certain cases, according to an EP source familiar with the contractor’s work, there was no activity, only reports were submitted to credit funds to Visage Media LTD’s accounts. Why did the latter turn a blind eye to this?

According to Hurzhiy, this company received a 3% commission on the funds sent. The rest remained at the disposal of the “HP champions” and HP representatives in Warsaw. So the role of Visage Media LTD was simply to transfer money at Hurenko’s request and to keep records of the transfer process.

Each member of the Ukrainian team determined how much money he or she needed to work with partners in his or her area. After each manager wrote down the needs, a picture was formed, which allowed them to accumulate HP funds on Visage Media LTD accounts. The cost of some projects with partners was actually the same amount, but the report for the European office had higher figures.

Entertainment, Las Vegas, and traveling to islands. How HP's Ukrainian managers luxuriated at the expense of the global office

Part of the “saved” funds with a suggestion for their use

At the same time, all partners had to send invoices only to Hurenko, who approved them for payment to Visage Media LTD. That is, for Ukrainian managers, Visage Media LTD turned from a contractor into a conventional bank through which payments could be made and funds kept for real or fictional activities.

“For some reports to the Americans, there were organized photo shoots with fake guests, branded materials, and a specially decorated conference room,” Hurzhiy notes.

Over the years, the “HP champions” team has managed to save about $1.8 million. This is only the amount that the American company’s auditors found.

To the conference in Las Vegas

Accumulating funds on the accounts of Visage Media LTD, the Ukrainian HP team repeatedly organized events for partners under the logo of the technology company, but did not mention them in the reports. In 2017-2019 alone, they and their partners traveled to Chile, the United States, Scotland, and the Azores. For example, the budget for an unofficial seven-day trip of the HP team with partners to Chile amounted to $99,000 or $6,600 per day per person.

To organize travel, Hurenko contacted a travel agency and negotiated with it as a contractor. The number of people, flight, accommodation, and travel program were discussed. The payment was made from the activities that allowed her to accumulate funds in Visage Media LTD. According to the EP’s source, the main criteria for organizing events was maximum quality, and the price did not matter.

For example, a trip to the Azores (Portugal) on July 18-23, 2019, cost almost $81 thousand for six days. The trip was presented as a retailer conference, but the program for partners and customers of HP Inc. in Ukraine did not include a business part. Instead, it was planned to visit three islands of the Azores archipelago.

Fajal Island was chosen to admire whales in the open ocean, São Miguel to swim in the Lake of Fire, and Pico Island to see the most picturesque views. In addition, the program included trips around Lisbon in vintage cars, a disco night, a meeting of future conquerors of the Azores over a glass of port at Cape Cabo de Roco, and wine tasting at a winery.

Representatives of Ukraine’s largest electronics stores (MOYO, Eldorado, Comfy, Foxtrot, Rozetka, Computer Vsesvit, Worldwide Manufacturing, E.D.) traveled to the Azores with HP managers. For the latter’s internal report, it was also a “working trip to the conference.”

According to EP’s sources, such trips had a positive effect on HP’s business, as they helped improve relations with partners. Why, then, did they not raise funds from the head office? The fact is that an American company never openly finances such things, as it is against its rules. In the United States, this could be interpreted as bribery with all the legal consequences.

The irony is that the Ukrainian HP team was not the only one to win loyalty in this way. In correspondence with each other, HP’s key account manager told Hurenko about the need to organize “an impressive trip for partners, because competitors from Dell and Xerox took them to the Seychelles and Zanzibar.”

Entertainment, Las Vegas, and traveling to islands. How HP's Ukrainian managers luxuriated at the expense of the global office

Agenda translation here

Sometimes they succeeded. As part of the PC Distribution Summit in the United States, managers of the Ukrainian company and its partners visited Los Angeles, Las Vegas, and the Grand Canyon in Arizona. Between these points, there were expensive restaurants, hotels, a helicopter ride, a Cirque de Soleil show, and a Lamborghini Huracán test drive.

For themselves, the “HP champions” and Ukrainian employees of the Polish office organized New Year’s corporate parties, holiday gifts, and birthdays for each member of the Ukrainian team. All that was funded with money that they managed to accumulate on the accounts of Visage Media LTD.

In conclusion

After receiving the request from the American auditors, Visage Media contacted HP managers in Poland, but received a response that they were not responsible for the contractor’s reports, as the contractor had to submit them independently. Hurenko began to claim that she had nothing to do with the Ukrainian HP team, as she was registered with one of Visage Media’s subsidiaries and was their employee.

Since 2021, the cooperation between Visage Media LTD and HP has ceased, and the “HP champions” have been transferred to another company. The funds managed by Hurenko were frozen on the accounts of Visage Media LTD. This led to outraged contractors who did not receive payment for their work.

Later, some of them were refunded, but not all. The core team that kept the scheme running remained in their positions.

“HP requires its employees, partners, and suppliers to uphold the highest standards of integrity and ethical business conduct. HP has carefully reviewed these allegations and conducted a thorough investigation,” HP’s US office responded to the EP in a brief statement. The results of this investigation are unknown.

HP’s Ukrainian management and Visage Media employees refused to communicate with the EP.