HP Chairman Could Fall in Boardroom Scandal

HP Chairman Patricia Dunn has no intent to quit, the company said. However, she will leave if asked.

Hewlett-Packard said the chairman of its board of directors intends to stay in place, despite an unfolding scandal.

However, Patricia Dunn, chairman of HPs board of directors, will step down if asked by fellow board members, HP spokesman Michael Moeller told eWEEK on Sept. 8.

Dunn is at the center of a scandal sparked by the airing of tactics used in an internal HP investigation used to find the source of details about board of directors meetings and other activities that were given to reporters, who published them in news stories.

That investigation, authorized by Dunn and executed by a group within HP as well as outside firm, involved the use of a technique called pretexting, HP said in a Sept. 6 filing with the United States Securities Exchange Commission.

Although HP maintains that the type of pretexting used—pretexting is the process of obtaining an individuals personal data such as phone records by pretending to be that person—was lawful at the time it was used, many believe it is, at a minimum, unethical.

The investigation ultimately concluded that George Keyworth, a board member, shared information on the boards activities without authorization, HP said in its SEC filing.

However, the resulting scandal surrounding the way that HP made that discovery has led many to ask that it be investigated. They are ultimately asking the question of how far a company can and should go in an effort to sniff out corporate leaks.


Thomas Perkins, a former HP board member, for one, resigned in protest to the handling of the investigations conclusions. Perkins later requested an investigation of the tactics used in the investigation, HP said in the filing, believing that his private communications had been monitored as part of the investigation.

A resulting investigation of Perkins claim by HP brought the pretexting scandal to light, in part by prompting the Sept. 6 SEC filing.

Although HP maintains that pretexting techniques used by its third-party firm were legal, Perkins has since asked U.S. prosecutors as well as the United States Federal Trade Commission and Federal Communications Commission to look into the matter, Reuters reported on Sept. 8.

The California District Attorneys office has already launched an investigation of HPs tactics, such as the use of pretexting, the company said in its SEC filing.

The California District Attorneys office has, thus far, informally asked for information regarding the processes used in HPs investigation, Moeller said.

/zimages/6/28571.gifClick here to read about ways to defend against pretexting.

He said HP has been cooperating with the investigation, but he declined to add further details.

Momin Khan, an analyst with Technology Business Research, said the moves that Dunn made appeared to be part of a larger company-wide push to improve the integrity of the corporate culture, including the leaking of information in violation of board of director rules.

However, it seems that in doing so, Dunn may have ensnared her self in a corporate legal issue.

"HP is on a path to return investor confidence and to create a culture of corporate responsibility and to introduce a more ethical business climate," said Khan, in Hampton, N.H. "In doing that, they might have shot themselves in the foot. Somethings not right. In trying to do good and straighten out things, they might have regressed."

But, whether or not it prompts wider investigation, the HP case has already shed more light on pretexting, which many privacy advocates have viewed as a threat to privacy, particularly since it can be done electronically.

Aside from using pretexting to access its board members phone records, HPs investigative firm also tapped into those records of about nine reporters, including writers for the Wall Street Journal and CNETs News.com, reports by the two publications said.

Moeller said that, in total, nine reporters records were accessed.

However, "HP is utterly dismayed that the phone records of journalists were accessed without their knowledge," he said.

Meanwhile, HP does not intent to re-nominate Keyworth to its board, it said in the filing.

But, despite garnering headlines, HPs boardroom tactics are unlikely to have an immediate impact on HPs customers, Khan said.

"If it is discovered that HP was involved in doing something illegal, I supposed it could," he said. "But I think what this is some people reacting to violations of board of directors meetings and disclosing information that should have not been disclosed."

Editors Note: Jeffrey Burt provided additional reporting for this story.

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