People Inside HP Could Be Indicted
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SAN JOSE, Calif. _ California's attorney general said Tuesday 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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HP Chairman and CEO Mark Hurd and seven other company executives are accused of selling $41.3 million worth of HP stock at "inflated prices" just before the company revealed details of a boardroom spy scandal.
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Despite the California attorney generalÂs assertion that he has enough evidence to press charges against people inside and outside Hewlett-Packard, a criminal case may be hard to prosecute, legal specialists say.
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A US attorney general is investigating methods used by Hewlett Packard to spy on senior members of staff.
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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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COMPUTER giant Hewlett-Packard's woes have escalated dramatically, with California Attorney General Bill Lockyer warning he has evidence to start indicting employees in the growing boardroom leaks scandal.
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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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Spy in our state, will you? It's looking less and less likely that HP will be able to fend off all of the legal issues around its spy scandal on the third parties it hired to investigate employees, directors, reporters and reporters' relatives.â¦
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A satirical look at the pretexting scandal at HP.
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By Jordan Robertson  California's attorney general said Tuesday that Hewlett-Packard insiders are likely to face criminal charges, putting a damper on the news HP was reshuffling its board because of the scandal surrounding its efforts to root out media leaks.
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California's attorney general says he has sufficient evidence for indictments within HP and outside the company in its investigation of whether the company illegally obtained the private phone records of directors and journalists.
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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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California Attorney General Bill   Lockyer may file criminal charges within a week in its   investigation of tactics used by Hewlett-Packard Co. HPQ.N in   an inquiry into boardroom leaks, a spokesman said on Wednesday.
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Here's a rundown of the agencies investigating HP's methods of tracking down a "leaker" on its board.
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Hewlett Packard's former chairwoman Patricia Dunn faces criminal charges along with four others.
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California's attorney general is preparing to file criminal complaints today against ousted Hewlett-Packard Co. chairman Patricia C. Dunn and four others for their roles in the Hewlett-Packard Co. spying operation that surfaced last month, according to sources close to the case.
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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.