- The Washington Times - Thursday, September 21, 2006


Hewlett-Packard Co. may be the world’s largest technology company, but the superlative that better suits it these days is “provider of the world’s strangest corporate drama.”

For two weeks, almost every day has brought revelations of questionable tactics that HP investigators used this year and last to root out who had been describing boardroom deliberations to the press. Corporate intelligence is an old and frequently practiced art, but HP’s efforts seem more like Watergate than Wall Street.

Not only did investigators impersonate board members, employees and journalists to obtain their phone records but, according to multiple reports, they also surveilled an HP director and a reporter for CNET Networks Inc. They sent monitoring spyware in an e-mail to that reporter by concocting a phony story tip.

They even snooped on the phone records of former CEO and Chairwoman Carly Fiorina, who had started the quest to identify press sources in the first place.

Yesterday, HP said it received a request from the Securities and Exchange Commission for information about the leak investigation. And several newspapers reported Chief Executive Officer Mark Hurd knew more about the computer and printer maker’s elaborate spying program than previously thought.

And in a twist that might seem preposterous if it happened in a movie, the New York Times reported that HP consultants considered hiring spies to pose as clerical or custodial workers at CNET and the Wall Street Journal.

“It betrays a type of corporate culture that is so self-obsessed, [that] really considers itself not only above the law, but above I think ethical decency, that you have to ask yourself, where did the shame come in?” said Charles King, an analyst with Pund-IT Research.

Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management, said the HP affair stands out even against similar episodes from the past, such as the 1991 incident in which Procter & Gamble Co. persuaded authorities to scour 803,000 phone bills to track leaks to a Wall Street Journal reporter.

“This sort of investigators-gone-wild behavior is in a novel realm,” Mr. Sonnenfeld said.

The almost certain illegality of posing as someone to obtain phone records has sparked state and federal probes into Hewlett-Packard Co.

Mr. Hurd has called a press conference for this afternoon to discuss the company’s investigations.

HP Chairwoman Patricia Dunn and the company’s general counsel are testifying to a congressional committee next week about why they approved the investigations. Lawyer Larry Sonsini, a Silicon Valley power broker who advised HP’s board, is also being called onto the carpet.

Mrs. Dunn has agreed to cede the chairmanship to HP’s chief executive in January, but she plans to remain on the board. Fortunately for her, but perhaps disappointing for those entranced by this drama, her two biggest enemies are gone: Director Thomas Perkins quit in protest of the investigation tactics, while Director George Keyworth resigned after being exposed as a leaker.

Mr. King said it could take awhile to tell whether HP’s brand is diminished.

“If I’m a consumer, do I want to buy products from a company that has committed what looks to be felonious behavior? I don’t know the answer to that.”

Shares of Hewlett-Packard fell the most in the Dow Jones Industrial Average yesterday, tumbling $1.91, or 5.2 percent, to $34.87.

California Attorney General Bill Lockyer said he has run into a “brick wall” in his probe of potentially illegal methods used to gather information on news leaks.



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