HP has played peacemaker with the Canadian government, agreeing to shell out $105m to settle a long-running contract dispute.

The $105m sum matches what Canada's Department of National Defence had been seeking from HP. The government argued that HP - and the old Compaq - had received payment for services never actually performed. HP has not admitted to any wrongdoing and plans to pursue the matter with lawsuits against third parties.

"HP determined that it was important for the company to honor its contractual obligations, rather than engage in protracted litigation with the Government of Canada, despite the lack of evidence that HP employees derived any improper benefit from the scheme," HP said. "HP now intends to take appropriate steps, including legal action, to recover these funds from the individuals and companies responsible."

Both HP and the Canadian government are being relatively quiet about exactly what went on in this services scandal. HP did, however, say other parties had engaged in a "complex scheme designed to exploit both parties through contracts inherited through HP's merger with Compaq Computer Corp."

Darren Gibb, a spokesman for Canada' Minister of National Defence, said that the government plans to assist HP in its pursuit of the third parties involved in the dispute.

"We have worked closely with HP on this and are conducting our own ongoing investigation," Gibb said. "We are absolutely delighted with today's' news. It shows that the government of Canada is committed to protecting tax payer dollars." ®

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