HP CEO Gets Pulled Into Boardroom Drama

UPDATED: The latest news in the HP boardroom drama is that CEO Mark Hurd may testify before Congress.

Meanwhile, HP announced that it’s reached a settlement with two of its former board members. The agreement includes a mutual release of claims between HP and Keyworth and Perkins as well as its current directors, officers and employees.

Also, HP said it was giving Keyworth and Perkins a “reservation of rights” to prosecute any claims against the third party investigators HP hired to investigate them or any family members as part of its efforts to plug leaks to the media over boardroom discussions.

The agreement also contains “mutual non-disparagement provision,” according to a filing with the Securities and Exchange Commission.

To date, there hasn’t been any mention or confirmation that anyone in Perkins or Keyworth’s family was investigated.

“Obviously the agreement reserves the right for Tom to pursue actions against the investigative firms should he so choose,” Mark Carallo, a spokesman for Perkins, told internetnews.com.

HP also said it would pay the legal expenses related to the case of both Keyworth and Perkins. Perkins quit the HP after first hearing his phone records had been accessed by outside investigators hired by HP to investigate leaks to the press.

Keyworth eventually admitted to being the source of some press leaks, though he said his comments to reporters were always done with the best interests of HP. He refused HP’s initial request to resign but eventually did earlier this month.

HP also confirmed in its filing that it received a request from the SEC for records and information related to the resignations of Keyworth and Perkins and the leak investigation. HP said it intends to fully cooperate with the request.

Separately, the Wall Street Journal reported that the House committee investigating the use of pretexting by HP contractors to access reporter’s phone records, is considering calling Hurd to tesify. HP’s chairman, Patricia Dunn, and general counsel, Ann Baskins, are already on tap to testify along with several of the investigators HP hired.

Meanwhile, e-mail records reportedly indicate top lieutenants at HP kept Hurd in the loop about the boardroom leak investigation that’s tarnished the computer giant.

A story in today’s Washington Post quotes e-mails the paper said it obtained between senior HP  officials detailing the progress of the investigation, which included an attempt to use phony documents to trick a reporter into revealing sources. Hurd was not a sender or recipient of any of the emails, according to the paper, but outgoing chairman Patricia Dunn said Hurd was “..on board with the plan …” in one e-mail.

The Post report gave no indication of where the e-mails came from, and there was no word from HP verifying the source of the e-mails.

The plan, however, was to plant a phony story to a CNET reporter about a new handheld device HP supposedly had in development, according to the e-mails.

It’s not clear if Hurd also knew about other parts of the scheme hatched by Ronald DeLia, a Boston security contractor hired by HP. The Post said DeLia suggested planting an electronic bug to track calls made by CNET reporter Dawn Kawamoto.

HP suspected one of its board members was providing confidential information about HP strategy to Kawamoto. George Keyworth later admitted being an unnamed source to CNET and has resigned from the HP board.

Separately, the New York Times reported HP investigators also floated the idea of posing as clerical workers at CNET and the Wall Street Journal in its quest to identify the leakers.

As more details about the boardroom scandal emerge, several investigative bodies, including a Congressional committee and the California Attorney General have started looking into the matter. The Calif. AG said it has enough evidence of malfeasance to indict HP officials. Congress is holding hearings next week at which HP officials are slated to appear as well as some of the outside investigators who’ve been subpoenaed.

HP announced it plans to hold a news conference Friday afternoon led by Hurd, who until this week was largely unscathed by the boardroom drama. A representative from the outside law firm of Morgan, Lewis & Bockius, hired by HP, is scheduled to be on hand provide provide information regarding the investigation of the leaks.

“This has nothing to do with the strategy or operations of HP,” said Hurd in statement. “What began as an effort to prevent the leaks of confidential information from HP’s boardroom ended up heading in directions that were never anticipated. HP is working hard to determine exactly what took place and when, and without all the facts it has been difficult for us to respond to the questions that have been raised. We plan to give as much clarity as we can to these matters.”

In afternoon trading, HP stock was down about five percent, trading at just under $35.

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