Management by Snooping Around?

 
 
By Eric Lundquist  |  Posted 2006-09-06
 
 
 

Is using phone records garnered by contractors through false representation unethical? Yes. Is it illegal? Maybe. Will it result in a large black mark for a company that champions privacy and consumer protection? It sure looks that way.

The current dispute among the Hewlett-Packard board includes sufficient allegations, finger pointings and mishaps on both sides of the ethical borderline to make the Carly Fiorina time at Hewlett-Packard seem like harmony personified.

The dispute is so far removed from the garage-beginnings and "managing by walking around" era of the companys founders as to seem like a different company than the namesakes Bill Hewlett and Dave Packard founded.

The synopsis drawn from news reports and SEC filings is as follows. Patricia Dunn (HPs non-executive chairman of the board since 2005) is upset over continued media leaks concerning discussions and decisions taking place among the HP Board of Directors.

In an effort to find out the source of the leaks, she launches an HP investigation. The investigative firm hired by HP contracts with another investigative firm which apparently uses pretexting to get the phone records of at least one and maybe several members of the HP board.

The investigators point the finger at board member Dr. George A. Keyworth II as the leaker. Keyworth refuses to resign and HP says they will not put him up again for nomination to the board.

A second board member, venture capitalist powerhouse Tom Perkins resigns over the investigation and vents his frustrations once he learns of the techniques used in the investigation and HPs reluctance to make those techniques public.

Pretexting is a polite term for lying and pretending to be a customer of a company (it could be a bank, phone company or whatever) to gain access to the customer records. In the HP case, it was private phone records.

The convenience offered by online bill paying and bill viewing has also opened up new opportunities for pretexters who, once they are able to obtain the minimal information needed to view online accounts, can gain access to those accounts and resell the digital information to a growing underworld.

While the FederalTrade Commission refers to the illegality of pretexting in relation to financial institutions, it is less clear about other institutions.

Meanwhile other federal and state investigators are indicating they want more information about the obtaining of the phone records by HP. Phone companies have been in the forefront of going after phone pretexters and in one more twist in the HP case, the president of Verizon Communications, Lawrence T. Babbio Jr., also sits on the HP board.

Click here to read more about HPs inquiry into alleged boardroom leaks.

Should board members leak confidential information? No. Are there instances where that confidentiality should be broken? Id say yes.

The board has to represent the interests of the shareholders and in the balance between confidentiality and shareholder interests, the shareholders (who really are the owners of the company) have to be served.

If you are a board chairman and are concerned about confidentiality leaks, should you engage in a fair and frank discussion with the board about your concerns and should those discussions lead all the way up to asking each board member if they are the leaker? Yes. Should you engage in any means necessary to get the information you seek? No.

At the point where you are about to cross the line between the information you want and the principles on which your company stands, you have to step back.

Ill be watching the court proceedings to see where the company drew that line.

Editorial Director Eric Lundquist can be reached at eric_lundquist@ziffdavis.com.

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