HP Execs Testify Before Congress

By Wayne Rash  |  Posted 2006-09-29

HP Execs Testify Before Congress

WASHINGTON—Throughout the monthlong controversy that has engulfed Hewlett-Packard over its investigation into news leaks, company executives have at once sounded contrite and dismayed at what happened, but have refused to take responsibility.

That trend continued here Sept. 28 during a daylong hearing before a House subcommittee looking into methods used by investigators hired by HP to find who was leaking sensitive company information to news media.

It was a sometimes frustrated Subcommittee on Oversight and Investigations that grilled HP executives—in particular former board Chairman Patricia Dunn, who initiated the investigation in early 2005 and again earlier this year—and saw a total of 10 other company employees or people hired by HP refuse to testify, instead opting to plead Fifth Amendment protection against self-incrimination.

Click here for more on the hearings.

"What were you thinking?" asked Rep. John Dingell, D-Mich., a member of the parent House Committee on Energy and Commerce, who sat in on the hearing. "Where was management when this investigation was running amok? Where was the board of directors? The cure appears to have been far worse than the disease. Where were the lawyers? None of the lawyers stepped up to their responsibility."

Dunn, who resigned from the board of directors Sept. 22, testified that while she initiated the investigation, she was assured throughout by lawyers and the investigators that the methods used were legal. While dismayed at the results, Dunn refused to take the hit for them.

"I do not accept responsibility for what happened," Dunn said when asked if she felt she was culpable for the mess.

The scandal has continued to snowball since HP first filed documents with the federal Security and Exchange Commission early this month acknowledging that investigators hired by the company used a legally questionable method called pretexting to obtain the telephone records of board members and journalists. Pretexting involves pretending to be someone else to get the records.

There are 10 lessons that should be learned from the HP scandal. Find out what they are here.

Since then, its been learned that investigators also followed board members and considered a plan to plant spies in newsrooms. The investigation has attracted the interest of several governmental bodies, including the SEC and the California attorney generals office.

The controversy has left several careers in its wake—the most recent being 24-year HP veteran Ann Baskins, the companys general counsel, who stepped down the morning of the hearing—and led to the resignations of three board members, including George Keyworth, who was discovered to have been the one leaking information to the press.

But while subcommittee members heard both Dunn and Mark Hurd, HP chairman, president and CEO, apologize for the scandal, both distanced themselves from knowledge of the investigative methods, and the panel was hindered in its attempts to glean details on what happened and who knew what. Among those who refused to testify were Baskins; Kevin Hunsaker, HPs former ethics officer; Anthony Gentilucci, ex-head of global security at the company; and Ronald DeLia of Security Outsourcing Solutions, the outside firm hired by HP to conduct the investigation.

Next Page: Skepticism over Dunns claims.

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Subcommittee members were skeptical of Dunns claims that she knew few details of how those investigators were operating, pointing to a series of e-mails, memos and PowerPoint slides they produced that seemed to show that Dunn was heavily involved in the details of the operation, named "Kona II," after a vacation she took in Hawaii.

One of those documents was a Feb. 7 e-mail from HP security official Vince Nye to Hunsaker questioning the legality and ethical nature of the pretexting. In addition, Fred Adler, HPs computer security investigator, testified that he was troubled by the methods being used and that he urged company executives to stop the practice and that the information obtained from it not be used.

Other documents released during the hearing indicated that Hunsaker and the outside investigators several times told Dunn and Baskins that the methods being used were legal.

"This was a plumbers operation that would make Richard Nixon blush if he were alive," Dingell said, comparing the scandal to Watergate.

During his testimony, Hurd again apologized for the conduct of the investigation, but, like Dunn, said he was unaware of the details until relatively recently.

"What began as a proper and serious inquiry of leaks to the press of sensitive company information from within the HP board became a rogue investigation that violated HPs own principles and values," according to Hurds prepared testimony. "There is no excuse for this."

Hurd, who said during a press conference Sept. 22 that he failed to read an 18-page memo in March on the investigation, testified that there were several times he missed opportunities to learn details of the initiative.

Click here to read Mark Hurds first public comments on the scandal.

"Im the one who is ultimately responsible," he said, adding that HPs founders would have been appalled at what has happened. Hurd also promised that he would continue to seek out those responsible, and to find out what really happened. "We will get to the bottom of this," Hurd said, "and it will never happen again."

Panel members clearly were frustrated by the lack of details.

"HP seems to be suffering from the Sgt. Schultz syndrome," said Rep. Edward Markey, D-Mass., quoting from a character on the TV show "Hogans Heroes." "I heard nothing, I saw nothing, I knew nothing."

Reuters contributed to this report.

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