HP's offices in Moscow were raided yesterday as part of an investigation into bribery, tax evasion and money laundering, the Wall Street Journal says.
German and Russian authorities are believed to be investigating the company over possible bribes to win a contract in Russia.
HP is suspected of having paid nearly $11 million in bribes to win a $48 million contract for a new computer system from the office of the prosecutor general of the Russian Federation.
Ironically, this is the government office responsible for investigating corruption, as well as other crimes.
The deal, which dates back to August 2003, was to be carried out through HP's German subsidiary. It involved a string of shell companies in the US as well as the UK, Latvia, Lithuania, Austria, Switzerland and New Zealand.
HP management is distancing itself from the allegation, pointing out that the alleged bribery happened years ago, and that many of the employees concerned are no longer with the company.
The WSJ says the German police have arrest warrants for 10 suspects. But, it says, it's proving difficult to identify the Russian official that signed the contract as the contract is illegible.
It's not great timing for Carly Fiorina, who was president of HP at the time of the alleged bribe - she's currently running for the US Senate in California.
And there could be repercussions for HP in the US, too, if the Securities and Exchange Commission decides to take an interest.