*NEWS*STATE OF CAILFORNIA INVESTIGATES HP

[Anonymous]

California Investigates Legality of HP Probe
SAN
FRANCISCO (Sept. 06) – Revelations that Hewlett-Packard Co. officials
used questionable tactics in an internal investigation into media leaks
have caught the attention of California’s attorney general, who’s
launched his own probe into the computer maker.Attorney General Bill
Lockyer subpoenaed some HP officials Wednesday in a probe he
characterized as still being in the “early fact-finding stage.”Lockyer
refused to say whether criminal charges would be filed against
Chairwoman Patricia Dunn, other directors or the private investigators
HP hired to find out who leaked confidential information to the media.
He said the state also could charge HP with civil violations and order
the company to pay fines.”I don’t have a settled view on whether it was
illegal yet, but it certainly was colossally stupid,” Lockyer said in a
phone interview Wednesday.

HP
disclosed in a filing Wednesday with the Securities and Exchange
Commission that it sought the private telephone records of the
company’s board members in its leak investigation. Private
investigators used the invasive and possibly illegal practice of
“pretexting” – posing as someone else to get personal information about
that person.HP said in the SEC filing that the company would decline to
nominate one board member, George A. Keyworth II, for re-election
because he was a source of the leaks. Keyworth, who has acknowledged
leaking information, will be gone by March 2007.The company also said
lawyers hired to review its tactics could not determine if the
investigation “complied in all respects with applicable law.”Experts
say Dunn, who announced the firing of HP Chief Executive Carly Fiorina,
may be the next to go.”If the chairman thinks this is the way business
ought to be conducted, maybe it’s time for her to take a sabbatical,”
said Peter Morici, professor at the Professor Robert H. Smith School of
Business at the University of Maryland. “It’s arrogant and
inappropriate.”

Identity thieves use pretexting to steal social security numbers and other confidential information.
In
this case, investigators hired by HP called the phone company and
impersonated at least one board member to get logs of phone calls to
and from his home, said the attorney of a former HP director.HP said in
the filing it would cooperate with the state probe and that no
recording or eavesdropping of directors’ phone conversations had
occurred. Spokesman Ryan Donovan said the company would not provide
other further details of the investigation. Dunn declined to
comment.Keyworth’s departure comes after a January article on CNET
Network Inc.’s News.com, which included a quotation from an anonymous
HP source who described a gathering of HP directors at a posh spa in
Southern California. Although the source didn’t leak high-level
strategic detail or say anything inflammatory, the statement angered
Dunn, who has been on the board for eight years.At a board meeting in
May, Dunn identified Keyworth as CNET’s source, as well as that of
other leaks dating to early 2005. The board asked Keyworth, 66, to
resign, but he refused.The investigation and attempted ouster riled
another board member, Tom Perkins, 74, who resigned and stormed out of
the May 18 meeting.In the months since his resignation, Perkins –
co-founder of Menlo Park-based venture firm Kleiner Perkins Caufield
& Byers – complained to other executives and journalists about the
investigation’s ethical implications.His attorney, Viet Dinh, a former
assistant U.S. attorney general, says he discovered that one of HP’s
private investigators also obtained the last four digits of Perkins’
social security number.The investigator used that information to open
an online account with AT&T, Dinh said. The investigator then
called the telephone provider and impersonated Perkins, offering up his
social security digits as proof of identity and asking AT&T to send
a record of phone calls to and from his house in December 2005 and
January 2006 to a free, Web-based e-mail account.

Perkins was unavailable for comment but issued a statement through his lawyer.
“Despite
this current disagreement, Tom Perkins has a warm place in his heart
for HP and believes in the prospects and performance of HP under the
leadership of Mark Hurd,” Dinh said.Dunn, 52, resigned as CEO of
Barclays Global Investors in 2002 to battle breast cancer and melanoma,
but she’s taken an active role as chairwoman of HP, the 11th largest
company on the Fortune 500.She was one of the board members who hired
Fiorina in 1999, but Dunn became disillusioned after years of
lackluster stock performance and, in December 2004, wrote a four-page
report to Fiorina detailing her concerns.Dunn announced Fiorina’s
resignation in February 2005, and two months later introduced Hurd, who
was favored by Keyworth and Perkins, among others.She majored in
economics and journalism at the University of California, Berkeley, and
worked as a freelance journalist before joining Barclays as a temporary
secretary.Dunn had reportedly grown increasingly upset over HP’s leaks
to journalists.Bruce Oliver, professor and director of the Center for
Business Ethics at Rochester Institute of Technology, said Dunn had the
right to seek out the source of leaks because board members often sign
nondisclosure agreements. But she crossed an ethical line in going
after the home phone logs, Oliver said.”To engage in some activity
where you’re hiring someone to do something on the QT where they’re
misrepresenting themselves, that’s over the line of what constitutes
ethical behavior,” he said.Others said the scandal could erode morale
on HP’s Palo Alto campus.”This sends a message to employees that the
company is willing to do just about anything to protect itself,” said
John W. Dienhart, business ethics professor at Seattle University.
“This sends a bad message to existing employees, and it’s bad for
attracting good employees from outside the organization.”

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September 7, 2006 at 11:27 AM