House Panelists Rail at HP
The main players in Hewlett-Packard Co.'s corporate spying drama faced outraged lawmakers Thursday, agreeing on only one thing: Someone else caused the mess.
Chief Executive Mark V. Hurd said responsibility ultimately rested with him. But then he asserted he had been unaware of just how far HP had gone in snooping on board members and journalists.
Former board Chairwoman Patricia C. Dunn, who initiated the probe into boardroom leaks, said she had assumed that HP executives were running a legal investigation.
And three executives -- all of whom have resigned over the scandal -- along with seven private detectives and contractors who may have improperly obtained phone records in the probe, didn’t say much at all. That’s because they exercised their 5th Amendment right not to testify on the advice of their lawyers in the face of criminal investigations.
“It’s a sad day for this proud company,” Rep. Diana DeGette (D-Colo.) said.
Thursday began with HP announcing the resignation of General Counsel Ann O. Baskins, who executives and documents indicated helped direct the investigation. She later declined to testify.
It ended with Hurd vowing to restore the image of the Silicon Valley icon that started humbly in a garage and grew into one of the world’s technology leaders.
“I pledge that HP will take whatever steps necessary to make sure nothing like this ever happens again,” he told members of the House Energy and Commerce investigative subcommittee. “And I pledge that this company will regain not just its reputation as a model citizen with the highest ethical standards, but we will regain our pride.”
That pride has taken a beating over the last several weeks as revelations have continued to emerge about the steps the Palo Alto-based company took to identify who was leaking information. Investigators working for the company followed board members, journalists and their relatives, impersonated them to obtain personal phone records, sent an e-mail with tracking software to a reporter and even combed through trash.
The House subcommittee summoned all of the main figures in the controversy to Capitol Hill -- eight required subpoenas to show up -- and administered a tongue-lashing.
Rep. John D. Dingell (D-Mich.) called HP’s internal probe “a plumber’s operation that would make Richard Nixon blush.” Rep. Cliff Stearns (R-Fla.) said it was a mix of “Keystone Kops,” “Mission: Impossible” and “All the President’s Men.”
And Rep. Edward J. Markey (D-Mass.) said the HP executives reminded him of the bumbling “Hogan’s Heroes” character Sgt. Schultz: “I heard nothing, I saw nothing, I knew nothing.”
Baskins, Senior Counsel Kevin Hunsaker and global investigations manager Anthony Gentilucci -- all of whom have resigned from HP -- invoked their constitutional right against self-incrimination in refusing to testify. They were joined by seven outside investigators and data brokers who worked on the probe.
The committee released one e-mail indicating that strong warnings were raised inside the company.
Vince Nye, a senior investigator in HP’s security department, warned in a Feb. 7 e-mail that phone records were being obtained in a manner that was “very unethical at the least and probably illegal.” But the e-mail was sent to Gentilucci and Hunsaker, who refused to testify, and Dunn said she never saw it.
Dunn was defiant in defending the goals of the internal investigation, while saying she was repeatedly assured by HP lawyers that no laws were being broken.
“If I knew then what I know now, I would have done things very differently,” she said. “I do not accept personal responsibility for what happened. I am very sorry for what happened.”
Dunn took most of the heat at the hearing. She said that although she knew investigators were obtaining phone records of people outside the company, she thought there were legal ways to get them. Rep. Greg Walden (R-Ore.) said that in one document he reviewed, Dunn suggested the records might have been available because of “administrative sloppiness” of phone companies.
The subcommittee released documents that indicated Dunn might have known that the legally questionable ruse known as pretexting -- impersonating an account holder to obtain that person’s records -- was used in the investigation.
According to another document, private investigator Ronald DeLia, managing director of Security Outsourcing Solutions Inc. of Needham, Mass., said he told Dunn in 2005 how pretexting was conducted.
Dunn testified Thursday that she did not remember the conversation and that she did not learn of the practice until this June.
“Would you give me ... your phone records?” Rep. Joe L. Barton (R-Texas) asked Dunn at one point, cutting to the heart of the controversy.
“In your position? I would give you my phone records,” she responded.
“Well, praise the Lord! I wouldn’t give you mine!” Barton said, as the packed hearing room exploded into laughter.
Then Dunn shot back: “I hope that doesn’t mean you have something to hide.”
Dunn asserted in the hearing that the privacy of board members was secondary to the damage to the company caused by leaks of confidential information.
But Hurd said plugging the leaks was not as high a priority for him as chief executive as running the entire company.
“Patti appropriately took it seriously,” Hurd said. “It wasn’t my personal No. 1 priority versus other things.”
Everyone at Thursday’s seven-hour hearing appeared to have vastly different goals.
Dunn was trying to salvage her reputation -- her lawyer even passed out 87-page binders with her life story, letters of support and a DVD of her induction this month into a Silicon Valley business hall of fame.
Hurd is seeking to rescue HP’s reputation and reassure investors who have seen him turn the company around, apologizing for the controversy and outlining how he plans to move forward.
People such as Baskins who were directly involved with the corporate spying wanted to avoid saying anything that could harm them if state law enforcement officials bring criminal charges. And lawmakers, with allusions to the Enron scandal, wanted to use HP’s problems to push legislation forward that would clarify federal law to make pretexting illegal.
Legal and boardroom experts following what one called HP’s monthlong “hemorrhaging of credibility and reputation” said they continued to be surprised by the lengths the company took and the knowledge that top executives had or should have had.
Dunn’s insistence that she knew little and had no authority to direct managers is “a little disingenuous,” said James Post, a Boston University business professor and lawyer.
Hurd, meanwhile, came out of Thursday’s hearings as a “strong leader, making no excuses and pledging to get HP back on track,” said Tim Bajarin, president of consulting firm Creative Strategies Inc.
Hurd and Dunn both supported the push by subcommittee members for pretexting legislation.
But Hurd said that, regardless of the law, HP failed itself.
“There’s a difference between legality and ethical behavior, and I don’t want to confuse the two,” he said. “We have a standard of business conduct that this violated, regardless of the legality.”
Times staff writer James S. Granelli contributed to this report.
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Key players in Hewlett-Packard Co.'s leak scandal
Patricia C. Dunn: Became a director in 1998, chairwoman in 2005. Ousted Sept. 22 for initiating the boardroom leak probe that has prompted state and federal investigations. Also vice chairwoman of Barclays Global Investors, where she previously served as chairwoman and CEO.
* Mark V. Hurd: Director since 2005, when he became HP’s CEO and president. Named chairman Sept. 22 after Dunn stepped down. Previously CEO of NCR Corp. Low-key Midwesterner hired by the board under Dunn’s leadership in 2005 to revive HP’s sagging stock price and slumping morale. Hurd was briefed in March on the findings of the leak investigation but said he did not read a written report that outlined the techniques -- including “pretexting,” the practice of impersonating a person to access their private information. News reports have also linked Hurd to a plot to dupe a reporter by sending bogus e-mail news tips.
* George Keyworth II: Became an HP director in 1986. Resigned Sept. 12 after acknowledging that he was a source of a media leak. Science advisor to President Reagan and director of the White House Office of Science and Technology Policy from May 1981 to January 1986. Director of the Physics Division at Los Alamos National Laboratory, which he joined in 1968.
* Richard Hackborn: HP director since 1992 and chairman from January 2000 to September 2000. Named lead independent director when Dunn stepped down. Primary advisor and mentor to ex-CEO Carly Fiorina.
* Thomas J. Perkins: Resigned from board of directors in May after discovering HP’s investigators used possibly illegal methods to gain home phone records of directors, journalists and other targets. Pressured HP to publicly disclose the reason for his departure.
* Ann O. Baskins: HP’s general counsel who resigned Thursday. The company’s top lawyer, Baskins’ office oversaw the leak investigation using investigators from HP’s global security team and outside contractors. Resigned amid criticism that she failed to protect the company’s interests. E-mails suggest she assured others of the probe’s legality.
* Kevin Hunsaker: HP’s former chief ethics officer. Reported directly to Baskins and directed the second leak investigation that used pretexting to obtain phone records. Left the company Sept. 26.
* Lawrence W. Sonsini: HP’s outside counsel. Reviewed HP’s investigation after it was completed. Initially told Tom Perkins in an e-mail that the probe appeared to have been “well done and within legal limits.” Later said he delivered that opinion based on information from HP’s legal department before his firm had a chance to thoroughly review the case. Sonsini then changed his tune, and HP disclosed in a Securities and Exchange Commission filing that Sonsini’s firm couldn’t confirm that the tactics of the outside investigators “complied in all respects with applicable law.”
* Ronald DeLia: Investigator with Security Outsourcing Solutions Inc., a detective firm and longtime HP contractor commissioned to conduct the leak probe. DeLia’s firm also participated in the inconclusive 2005 HP investigation into boardroom leaks.
* Vince Nye: A senior investigator in HP’s global security department. Sent a Feb. 7 e-mail to his boss, Anthony Gentilucci, warning that he had “serious reservations” about the tactics, saying they could be illegal and should be halted immediately. It’s not clear how Gentilucci responded. Gentilucci resigned Sept. 25.
Source: the Associated Press