*NEWS*HP INSIDERS FACE CRIMINAL CHARGES

[Anonymous]

HP Insiders Likely to Face Criminal Charges
SAN
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
over.
California’s
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.”
The
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.”

[Author]

September 13, 2006 at 12:12 PM