UPDATE: People Inside HP Could Be Indicted
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By Pete Carey, MEDIA NEWS  California's attorney general said today his office has enough evidence in the Hewlett-Packard boardroom leak scandal to indict people inside the company on criminal charges.
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There was a question mark hanging over Hewlett-Packard Co chair Patricia Dunn after revelations that an investigation she launched violated the privacy of her fellow HP directors, several journalists and their families, and probably broke the law.
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By AP Wire Services  SAN JOSE, Calif.  -- Congress and federal investigators on Monday entered the fray surrounding Hewlett-Packard Co.'s possibly illegal probe of media leaks, as the company's board met to discuss the fate of its embattled chairwoman.    With the FBI, the U.S.
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At least two former Hewlett-Packard executives, plus three others outside of the company are expected to be indicted in California as early as Wednesday on at least four felony charges. Those named in the indictments include former chairwoman Patricia Dunn.
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Hewlett-Packard Co. chairwoman Patricia Dunn, a former company lawyer, and three outside investigators wereÂ charged Wednesday in CaliforniaÂ on felony charges related to the conduct of an investigationÂ to track down news leaks from the HP board that allegedly broke state law.
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(InfoWorld) - In one telling moment during the recent Congressional hearings onÂ the Hewlett-Packard Co. board scandal, ousted chairman Patricia Dunn offered the "everybody does it" defense. Asked by one legislator about HPâs hiring private investigators who obtained phone records under false pretenses, a practice called pretexting, to identify whoâd leaked confidential information, Dunn replied, "I believe these [pretexting] methods may be quite common at companies around the country." If so, that is chilling to business ethicist Kirk Hanson. "As an ethicist Iâm horrified that HPâs managers relied on the assertion that it was borderline, but legal, and never asked whether it was ethical," says Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University, in Santa Clara, California. If HP adopted what Hanson called "black ops" as standard investigative practices, he wonders how many other companies have done it. HP, some of its employees and companies it hired to investigate boardroom leaks to news media still face potential civil and criminal liability for their actions. Other companies find themselves in a dilemma over how to control information within the law. Companies may have a moral or legal responsibility to respect peopleâs privacy, but they also have a legal and fiduciary responsibility to protect confidential business information. And under the federalÂ Sarbanes-Oxley ActÂ in effect the last four years, they have obligations to investigate certain leaks, Hanson says. Companies have a right to investigate their own employees if theyâre suspected of leaking information. Employees should presume no right to privacy in their use of company computers, e-mail programs or telephones. One commonly used tactic to probe security breaches doesnât even involve electronic snooping. Companies exclusively give suspected leakers seemingly important but relatively benign information. If it turns up in the media, the company has identified the leaker. But Hanson sees a bright line separating how a company can investigate its own employees and how it can investigate outsiders. The HP reaction to leaks to reporters contrasts with the recent practice of Apple Computer Inc. when proprietary information got out. Although Apple is known for its devotion to secrecy, it went to court rather than to private eyes when confidential information leaked in 2004. Apple, of Cupertino, California, sued in state court to force two Web sites to reveal sources for stories they posted about a possible new Apple product. A state appellate court ruled May 26 that the writers on those Web sites enjoy the same First Amendment rights as mainstream journalists and, thus, were protected by Californiaâs shield law from having to reveal their sources. Apple dropped the case. It did not reply to a request for comment on this story. The Sarbanes-Oxley Act requires companies to develop a whistle-blowing reporting system so employees can raise issues about improper behavior within the company, said Hanson. That has prompted companies to develop an investigative capability in the event improper or illegal activity is alleged. "So (under SOX), companies have developed much enhanced investigative capability," he said. Companies also have to keep confidential information safe because disclosure could be a criminal act or a breach of fiduciary responsibility, said Rob Enderle, senior analyst at Enderle Group, a technology market research firm. If word leaks that a board is contemplating an acquisition, for instance, the company or people in it could be prosecuted for insider trading if people used that knowledge to make stock trades. Given the potential liabilities, corporate investigations of leaks are "common," said Enderle. "The stuff with the pretexting goes to the extreme, but looking at company phone records or e-mails, that is very common. Hiring an outside contractor is also common." In fact, leak investigations enjoy broad support among corporate directors. In a September telephone survey of 226 board members at publicly traded companies in the U.S., 73 percent said a company's chairman should be empowered to use any legally available means to identify a board-level leaker, according to Ponemon Institute LLC. About 71 percent of the respondents said it would be okay for a board chairman to review the e-mail messages of other members, in addition to other types of confidential data stored on company computers. Fifty percent said that reviewing telephone records of individuals obtained via pretexting is proper as long as that approach hasn't been outlawed. But HPâs tactics of tailing reporters, attempting to install a tracer on a reporterâs e-mail program, pretexting numbers of people outside the company and even considering planting spies in newsrooms as janitors or clerical workers is "bizarre" to Rick Belluzzo. "The reaction by HP was totally out of proportion with the situation," said Belluzzo, chairman and CEO of Quantum Corp., a network storage equipment maker. His rÃ©sumÃ© includes president of Microsoft Corp. and a 23-year stint at HP, where he rose to the position of executive vice president of its computer division. While he understands the importance of keeping certain information confidential and making employees and directors sign confidentiality agreements, HP overreacted to information leaks that are sometimes going to happen anyway. "Itâs an impossible task to control information flow. Some leaks are inevitable," Belluzzo said.
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SACRAMENTO, Calif  - California's attorney general will seek indictments on Wednesday in Hewlett-Packard Co.'s  boardroom leak probe against former Chairman Patricia Dunn and others but not Chief Executive Mark Hurd, BusinessWeek reported in its online edition.
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(InfoWorld) - Hewlett-Packard chief executive officer Mark Hurd blamedÂ the scandalÂ that has besieged his company on "a rogue investigation" that got out of hand, in an advance copy of his Congressional testimony released by a House Subcommittee on Wednesday. "How did such an abuse of privacy occur in a company renowned for its privacy? The end came to justify the means," Hurd wrote. "The investigation team became so focused on finding the source of the leaks that they lost sight of the privacy of reporters and others. They lost sight of the values HP has always represented." Former HP Chairman Patricia Dunn,Â forced to resignÂ Sept. 21 because of the scandal, defended in her testimony her decision toÂ investigate the leaksÂ of confidential board discussions to the news media. In her testimony, Dunn wrote that she knew investigators were obtaining the phone records of people it was investigating. Lawyers for HP and for an investigation firm carrying out the probe assured her the tactics were legal, she wrote. "I was fully convinced that HP would never engage in anything illegal," she wrote. "Given that attorneys were unambiguously overseeing the investigation ... reinforced my understanding that the investigations were being handled appropriately." Both are among severalÂ witnesses expected at a hearingÂ before the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee on Thursday in Washington. The committee is looking into the practice of "pretexting," or using false pretenses to gain access to confidential records. Investigators hired by HP to find the source of leaks engaged in pretexting to get hold of the phone records of directors, HP employees and reporters who cover the Palo Alto, California, technology company. Hurd, echoing comments he made in a news conference last Friday at HP's headquarters, said he was determined to get to the bottom of this episode and to try to restore HP's image. "I pledge that HP will take whatever steps are necessary to make sure nothing like this ever happens again," he wrote, "and that this company will regain not just its reputation ... but its pride." Although much of the criticism of the scandal surrounds the tactics used by the investigators, Dunn wrote in her testimony that equal consideration should be given to the leaks from within the company that damaged HP. HP's board was notorious for its leaks to news media and such disclosures made it difficult for the board to deal with important issues candidly, she wrote. Dunn explained that board deliberations on the selection of a replacement for former CEO Carly Fiorina in 2005 were leaked. She cited a BusinessWeek magazine story "disclosing opinions about various candidates and revealing details about ... the search process." "If you were a top CEO candidate, would you want to work for a company whose board could not be trusted to keep such information confidential? HP is very lucky to have been able to recruit Mark Hurd under such circumstances," Dunn wrote. "I wish fervently that none of this had ever happened," Dunn continued. "But boards have an unquestionable obligation to take steps to prevent [leaks]. That certain steps taken during the investigation went well beyond what was appropriate does not undermine the importance of the board's mission in this matter." Hurd also outlined several steps the company is taking internally to clarify its privacy policy for employees and to emphasize it in employee training programs.ADVERTISEMENTMAKE SOA REAL WITH IBM WEBSPHERE PODCASTStreamline processes and maximize efficiency within a proven service oriented architecture. Take back control of your business processes with IBM WebSphere.
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(InfoWorld) - An attorney hired by Hewlett-Packard to investigate the conduct of HP and outside investigators has provided new details of his firm's investigation ofÂ news leaks from the HP board. Mike Holston, a partner in Morgan, Lewis & Bockius was hired Sept. 8 to conduct an independent investigation of the scandal and reports directly to HP Chief Executive Officer and President Mark Hurd. Morgan Lewis has reviewed some of the approximately 1 million pages of documents it received from HP and outside investigators hired by HP to trace the news leaks. It determined that HP Board Chairman Patricia Dunn authorized two separate investigations: one to probe leaks in 2005 and a second in 2006. The Morgan Lewis probe found that HP hired in 2005 Security Outsourcing Services (SOS), of Needham, Massachusetts, a private security firm, to probe the first series of leaks. This is the first official confirmation that HP hired that firm, even though it had been identified in several recent news stories. Two months into SOS's probe, HP's Global Security division also joined the investigation. The investigation concluded in July 2005 without being able to identify the source of those leaks. When CNet NetworksÂ reported Jan 23, 2006, on the details of a private board meeting, HP launched a second investigation with the help of SOS and HP Global Security. Dunn, Hurd, HP's General Counsel Ann Baskins, and Jim Fairbaugh, chief of Global Security, approved the second investigation. Dunn and Baskins were kept up to date on the course of the investigation over the next three months, Holston said. "It is now clear that the investigation included tactics that ranged from the review of HPâs internal e-mails and instant messages, to the physical surveillance of an HP Board member and at least one journalist, to the "pretexting" of telephone call information of board members, HP employees, and journalists," he said, adding that SOS's legal counsel informed HP that SOS's investigative techniques were legal. The investigators presented a draft report to HP in March 2006 identifying the source of the board leaks and detailing some of their investigative methods, including pretexting, which is obtaining access to private phone records under false pretenses. HP sent a copy of the report to its outside legal counsel and the report was disclosed at a May 18 board meeting. In a separate HP filing Sept. 6 with the U.S. Securities and Exchange Commission, the company disclosed that director George Keyworth was the source. While he acknowledged his role, Keyworth refused to resign at that May board meeting. HeÂ eventually resignedÂ Sept. 12. Holston went on to say that Tony Gentilucci, another member of HP's Global Security division and a member of the investigative team, turned over the Social Security number of an HP employee to SOS. SOS then turned that and other Social Security numbers over to Action Research Group, another private investigative firm, which used the numbers to help gain unauthorized access to private phone records. This is also the first acknowledgement that Action Research, of Melbourne, Florida, was involved, although it had been identified in news reports. Disclosing personal employee information is a violation of HP policy, and could result in Mr. Gentilucci's dismissal, said a source inside the company who declined to be identified. Holston also disclosed that investigators attempted to send an e-mail to a CNet reporter from a fictitious disgruntled HP employee that contained a hidden attachment, called a "tracer," that would track who the reporter contacted about the tip so as to identify her sources. HP did not disclose the identity of the reporter Friday, but she was identified in a Sept. 21 Washington Post article as Dawn Kawamoto. But Holston said it could not be determined whether the tracer was ever activated. Hurd acknowledged in his remarks that heÂ approved the fake e-mail schemeÂ but said he did not know it involved use of the tracer. And although another scheme to send spies into the San Francisco offices of CNet and The Wall Street Journal posing as clerical or janitorial workers was considered, there was no indication it was ever carried out, Holston said.
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A US attorney general is investigating methods used by Hewlett Packard to oversee senior members of staff.
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As scandal over HP methods mushrooms, House plans investigatory hearings; company reps will likely be called to testify.
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A shareholder lawsuit against Hewlett-Packard (HP) forÂ attempting to spy on board members and reportersÂ has been expanded to include charges of insider stock trading.
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Internal documents say HP has pretexted before and that its investigators trailed a reporter while on vacation.
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(InfoWorld) - Ousted Hewlett-Packard chairwoman Patricia Dunn is expected to be indicted Wednesday in California on charges related toÂ the spying scandal that has hit the company, the New York Times reports. To be indicted along with Dunn are Kevin Hunsaker, a former senior lawyer at HP; Ronald L. DeLia, a Boston-area private detective; Joseph DePante, owner of Action Research Group, a Melbourne, Florida, information broker; and Bryan Wagner, a Littleton, Colorado, man who is said to have obtained private phone records while working for DePante, the Times reported. The charges are expected to come from California Attorney General Bill Lockeyer,Â whose office has been investigating reportsÂ that HP hired private detectives and may have used illegal methods to track the source of news leaks from the board of directors. The charges are expected to include using false or fraudulent pretenses to obtain confidential information from a public utility, unauthorized access to computer data, identity theft, and conspiracy to commit each of those crimes, the Times reported. All of the charges are felonies. The private investigators hired by HP allegedly used "pretexting," pretending to be journalists from a number of various publications to obtain their telephone records in an attempt to find out who from the board provided information to the reporters.
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Patricia C. Dunn, the former chairwoman of Hewlett-Packard, and four other people will be named in indictments expected to be filed by CaliforniaÂs attorney general today in the spying case at the company, according to lawyers involved in the case.
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(InfoWorld) - A U.S. government panel has asked a corporate ethics lawyer from Hewlett-Packard (HP) to testify in its Sept. 28 hearing onÂ the company's use of "pretexting"Â to spy on journalists, board members and other employees. The investigative unit of the U.S. House Energy and Commerce CommitteeÂ said Wednesday that it has asked HP Senior Counsel Kevin Hunsaker and Fred Adler, a company computer security investigator, to join a growing list of witnesses. The subcommittee had also previously requested testimony from outgoing HP Chairman Patricia Dunn, HP General Counsel Ann Baskins, HP Global Security Manager Anthony Gentilucci, outside attorney Larry Sonsini as well as outside investigators. The practice of "pretexting" usually involves pretending to be a person, in order to obtain that person's personal information. An HP spokesman declined to comment. Up until now, Dunn has insisted she merely initiated the probe of boardroom leaks, and was ignorant of specific techniques used by investigators. "Unfortunately, the investigation, which was conducted with third parties, included certain inappropriate techniques. These went beyond what we understood them to be, and I apologize that they were employed," Dunn said in a recent statement. ButÂ e-mail correspondence examined by newspapersÂ including The Wall Street Journal and The New York Times indicates that top HP officials solicited Dunn's opinion and questioned investigation techniques throughout the course of the leak probe. As early as Aug. 6, 2005, HP's Gentilucci asked for Dunn's advice about using "internal and external sources" to gather intelligence on "interested parties," according to company e-mail seen by The Wall Street Journal. Gentilucci offered to brief HP management on more details of "Project Kona" in a proposed meeting on Aug. 31. It is still unknown if that meeting took place, but Dunn replied to the e-mail, promising to respond. By Jan. 28, 2006, e-mail from Hunsaker to Adler shows that HP's own lawyers were closely questioning investigation techniques, The Wall Street Journal reports. Asked whether HP could legally spy on board members' cell-phone text messages, Adler replied: "Even if we could legally obtain the records, which we can't unless we pay the bill or get consent, I would highly suspect text-messaging records are not kept due to volume and expense." It is unclear if HP obtained text messages. But in an April 28 e-mail to Gentilucci and an outside investigator, Ron DeLia of Security Outsourcing Solutions Inc., in Boston, Hunsaker said he was writing at General Counsel Baskins' request to confirm the details of how the investigation team obtained phone records, The Wall Street Journal reports. In the e-mail, Hunsaker described how investigators were making "pretext calls." Hunsaker also said in the e-mail that his legal research confirmed that pretexting is legal. However, California Attorney General Bill Lockyer has said that using fraudulent means to obtain personal information is not legal in the state. Lockyer has said he has evidence to charge people outside and inside HP. House investigators have also asked for testimony from DeLia and private investigator Joe Depante, owner of Action Research Group, which was reportedly hired by HP to help in the investigation. Dunn agreed on Sept. 12 to resign her own position, and will be replaced in January by current chief executive Mark Hurd. Â
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(InfoWorld) - The U.S. Department of Justice is asking questions about conduct by Hewlett-Packard Co. that has embroiled the technology company in controversy. HP acknowledged in a U.S. Securities and Exchange Commission filing Monday that it isÂ cooperating with an inquiryÂ by the U.S. Attorney for the Northern District of California intoÂ possibly illegal tactics used by investigators hired by HP to investigate news leaks from the company's board members. HP described the U.S. Attorney's inquiry as "informal" and said the questions are similar to those asked by the attorney general of California. HP is based in Palo Alto, California. "We are cooperating fully with these inquiries," HP said in its SEC filing. The probes are looking into the use of "pretexting" to search phone records to determine which board members may have been talking to reporters. The phone records of nine reporters from various news organizations were also obtained to determine who their sources from within HP might have been on stories about the company. Pretexting refers to posing as a phone company customer to get access to personal records. California Attorney General Bill Lockyer says a crime was committed in connection with the pretexting, but his office is still investigating what crime and by whom. The scandal has brought pressure on HP Chairman Patricia Dunn, who ordered the investigation, but claims she didn't know the outside investigative firm hired to trace the leaks would engage in pretexting. HP's board is meeting Monday for the second straight day to discuss its response to the controversy. Former HP director Thomas Perkins, who quit in protest in May because of the way the investigation was conducted, called on Dunn to resign. His statement, released Saturday by his attorney, was prompted by Dunn's comments in media interviews last week in which she alleged that it was Perkins who wanted "more aggressive measures" used to investigate the leaks, including use of lie detectors on board members. "I am saddened, but not surprised, that Patricia Dunn has attacked me personally for doing my job. I acted not from any ill will toward Ms. Dunn but to protect the best interests of HP. I think the past months and days have shown that those interests are best served if Ms. Dunn would resign from the board," said Jenkins in his statement. The U.S. Federal Communications Commission also is investigating HP. The FCC reportedly sent a "letter of inquiry" to AT&T Inc. asking how its customer phone records may have been accessed, according to an Associated Press report. An FCC spokesman could not confirm that. HP's internal probe identified director George Keyworth as the source for a CNet Networks Inc. story about HP's strategy, which the technology news Web site posted in January. He refused to resign when asked to doÂ so by Dunn in May, but theÂ board has since voted not to renominate him to his seat. Â