Tension Escalates Over HP Scandal

Patricia C. Dunn appeared with Hewlett-Packard president and chief executive Mark Hurd at a news conference on March 30, 2005, when their appointments were announced after Carly Fiorina was removed.
Patricia C. Dunn appeared with Hewlett-Packard president and chief executive Mark Hurd at a news conference on March 30, 2005, when their appointments were announced after Carly Fiorina was removed. (By Paul Sakuma -- Associated Press)
By Ellen Nakashima
Washington Post Staff Writer
Saturday, September 9, 2006

Hewlett-Packard Co.'s board of directors yesterday called an emergency meeting for Sunday as a scandal involving spying on board members and journalists escalated and prompted Chairman Patricia C. Dunn to say she would step down if asked.

California Attorney General Bill Lockyer, meanwhile, said the case was wider than previously reported and hinted it that it could go grow beyond the Silicon Valley technology pioneer. In an interview yesterday, Lockyer said the investigation stretches back to 2005 and involves an internal investigation that HP conducted of leaks to the media.

Lockyer is conducting a criminal investigation of how contractors hired by HP obtained personal records by posing as someone else, a practice known as "pretexting," to determine who leaked confidential company information to the media.

"I worry that this may be an inquiry that's only touched the tip of the iceberg, not with respect to HP, but perhaps to similar practices in other businesses or other segments of our life," Lockyer said. "Could it be galactically stupid? It doesn't get much worse."

The board meeting, which will be conducted by telephone, likely will focus on the fate of Dunn, who took over as chairman after the high-profile ouster of Carly Fiorina in February 2005.

Dunn yesterday distanced herself from the tactics used by subcontractors for HP, saying in an interview with the Associated Press that she had not approved them. Dunn called the tactics "absolutely appalling.'' But she said she serves at the pleasure of the board and "if they think it would be better for me to step aside, I would do that."

She said that "a number of directors have urged me to hang in there," but declined to say how many on the nine-member board support her.

Dunn is under growing pressure after revelations that she ordered an internal investigation early this year to find out who leaked information discussed at a private board meeting to journalists. As part of that probe, Hewlett-Packard hired an outside firm that in turn retained a third party to obtain personal phone records.

Investigators were able to convince phone companies, including AT&T, that they were the customers themselves -- in this case, board members or journalists.

One person who will not take part in Sunday's meeting is Thomas J. Perkins, who resigned from the board in May over opposition to the spying.

In a confidential e-mail to Hewlett-Packard's outside counsel, Larry W. Sonsini, obtained by The Washington Post, Perkins wrote: "Larry, the investigation was a Pattie Dunn program 100 percent conceived and managed by her, and unknown to the board, except perhaps in the most vague and imprecise terms. . . ."

HP spokesman Ryan Donovan said the first leak investigation began in 2005 under Fiorina.

Sonsini, who ran the investigation, said it was confined to phone interviews with directors about whether or not they had leaked confidential information. He said he turned up nothing and that the investigation ended there.

In an interview, Sonsini said he did not know of any use of pretexting to obtain records in that investigation.

When the leaks continued, a second investigation began under Dunn, and that is when outside investigators were hired, according to a filing with the Securities and Exchange Commission.

At Perkins's request, Sonsini reviewed the second probe. In an e-mail to Perkins, he said, "there was no 'secret spying,' i.e. no electronic gear, listening devices."

Sonsini also said there was no phone recording or monitoring of directors' e-mail.

Staff researchers Richard Drezen and Karl Evanzz contributed to this report.

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