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 user 2006-09-13 at 12:12:00 pm Views: 39
  • #16444

    HP Insiders Likely to Face Criminal Charges
    JOSE, Calif. Sept. 06 – Hewlett-Packard reshuffled the leadership of
    its board of directors amid the scandal surrounding its investigation
    of internal leaks to the media, but the company’s troubles are far from

    attorney general warned for the first time Tuesday that company
    insiders are likely to face criminal charges.”We currently have
    sufficient evidence to indict people both within Hewlett-Packard as
    well as contractors on the outside,” Attorney General Bill Lockyer
    said.He made that statement late in the day on PBS’ “NewsHour with Jim
    Lehrer,” following HP’s early morning announcment that Chairwoman
    Patricia Dunn would step down in January and be replaced by Chief
    Executive Mark Hurd. Meanwhile, another director who acknowledged he
    was a source of leaks resigned from the board.It was another chaotic
    day in a scandal that has rocked Silicon Valley’s biggest and oldest
    technology company, led to investigations by state and federal
    authorities, and raised questions about one of the most powerful women
    in corporate America.Dunn has admitted authorizing the investigation
    and she defended the need to determine who was leaking boardroom
    secrets to the media. But she said she was appalled that private
    investigators hired by the company used Social Security numbers to
    impersonate HP directors and journalists, then persuaded phone
    companies to turn over detailed logs of their home phone calls.The ruse
    - known as “pretexting” – is commonly used by private investigators but
    is against the law, according to Lockyer.”Unfortunately, the
    investigation, which was conducted with third parties, included certain
    techniques,” Dunn said in a statement. “These went beyond what we
    understood them to be, and I apologize that they were employed.”The
    FBI, the U.S. Attorney for Northern California and the House Energy and
    Commerce Committee have requested information on HP’s investigation.
    The Securities and Exchange Commission and the Federal Communications
    Commission are also investigating.Dunn will remain on the board after
    giving up the top job on Jan. 18. She will be succeeded by Hurd, who is
    respected on Wall Street and untainted by the investigation at the Palo
    Alto-based computer and printer maker.

    Dunn said that the probe’s methods “have no place in HP.”
    company’s stock continued a steady climb that began not long after HP
    revealed details about the investigation in a regulatory filing. Shares
    of Hewlett-Packard Co. rose 56 cents, or 1.54 percent, to close at
    $36.92 on the New York Stock Exchange. The stock hit a new 52-week high
    of $37.25 earlier in the session.Industry analysts say Hurd’s track
    record as CEO and straightforward style make him the logical pick to
    replace Dunn in as the company copes with the backlash from the
    breaches.”This is a very elegant solution to a tricky situation,” said
    technology industry analyst Cindy Shaw, a former HP employee.Dunn was
    angry about media leaks of confidential board discussions and
    commissioned an unnamed outside firm to identify their source. At a
    board meeting in May, Dunn identified director George Keyworth III as
    the source of a January article on CNET Networks Inc.’s News.com. The
    board asked Keyworth, 66, to resign, but he refused. HP then barred him
    from seeking re-election.On Tuesday, Keyworth resigned and acknowledged
    sharing company information with reporters, but said he did so with the
    company’s approval.”The invasion of my privacy and that of others was
    ill-conceived and inconsistent with HP’s values,” he said in a
    statement.The attempt to oust Keyworth last spring riled another board
    member, longtime Silicon Valley venture capitalist Tom Perkins, 74, who
    resigned and left the May 18 meeting.HP’s focus should now be on moving
    forward with Hurd at the helm, Perkins said, but he won’t return to the
    board if invited.”I believe in HP. I believe in Mark Hurd,” he said.
    “This too shall pass.”The pressure on Dunn to step down increased when
    Congress and federal investigators joined the probe.Some analysts said
    Dunn should have been removed altogether, but Roger Kay, who follows HP
    as president of the market research firm Endpoint Technologies
    Associates, had a different take.”I think the fact that they made the
    statement that she’s going to leave solves most of the problem,” he
    said. “I don’t think it’s that material precisely when she leaves.”