Leak Probe Ripples HP Board

UPDATED: HP today filed with the Securities and Exchange Commission (SEC) an explanation of its investigation into corporate leaks and the
resignation of a member of the company’s board of directors.

The resignation of HP board member Thomas J. Perkins has attracted the attention of government regulators and California’s attorney
general to methods used during a 2005 investigation into leaks from a
board of directors meetings.

Perkins’ May resignation followed a dispute with HP’s then Chairman of the Board Patricia Dunn, who replaced Carly Fiorina.

Dunn
told the full board that an internal investigation revealed that fellow board member George Keyworth leaked boardroom discussions to the press.
Keyworth admitted he had leaked internal information but refused to
resign.

Today’s SEC filing is to “insure transparency,” Mike Moeller, HP
spokesperson, told internetnews.com.

Moeller wouldn’t provide
details on the investigation, but said Perkins has changed his mind about disputing the methods.
“When he left, there wasn’t a dispute” over the leak probe, according
to HP.

While HP denied that the leak probe was the reason for Perkins’ departure, the
investigation is at the center of the speculation.

The investigation began after the company found itself “the subject
of multiple leaks of confidential HP information, including
information concerning the internal deliberations of its Board of
Directors,” the company told regulators.

After initial interviews with members of the board proved fruitless
in early 2005, HP hired an outside consultant with “substantial
experience in conducting internal investigations,” according to the
report.

While HP said it told the consulting firm to obey the law, another
company was hired by the consultants to “obtain phone information
concerning certain calls between HP directors and individuals outside
of HP,” the company said in the report.

That company “had in some cases
employed pretexting,” according to HP’s Nominating and Governance
Committee, which investigated the leak probe.

The committee said while pretexting, a technique employing deception
to obtain information, “was not generally unlawful,” it could not be
certain the third party retained to obtain the telephone information
“complied in all respects with applicable law,” according to the
statement filed with the SEC.

HP’s CEO and board accepted the committee’s findings, including
strengthening control over future investigations and ensuring that
management knows probes comply with laws, as well as HP’s own code
of ethics.

HP also told the SEC it will not nominate Keyworth for another term
on its board.

The leak probe was sparked by a number of news items that reached
HP’s inner sanctum. High-profile decisions made in private were
winding up on the front page.

Earlier this week, Newsweek quoted HP insiders saying Dunn had
requested the internal investigation following leaks of HP management
get-togethers where important decisions were made.

For example, in 2005, after a Jan. 10 meeting with Fiorina, board
members Dunn, Keyworth and HP executive Richard Hackborn met with the
CEO at HP headquarters to tell Fiorina the board was unhappy.

On Jan. 24, the Wall Street Journal included the discussion in a front page
story.

A similar leak appeared earlier this year when CNET published a story about HP considering a closer working relationship with AMD. The
story quoted an HP source talking at a private board meeting held in
Palm Springs, Calif., according to the Wall Street Journal.

“This type of thing goes on all the time,” said Laura DiDio, analyst
with the Yankee Group. “Nobody really likes to talk about it.”

This time, however, the SEC filing brought it to light.

However, “the solution is as bad as the leaking,” according to DiDio.

Although the company doesn’t like leaks, DiDio said “HP doesn’t have
the image of crawling around in the dark.”

The news won’t hurt HP’s winning ways, said the analyst, but “it’s a
little embarrassing.”

Apple attempted to gain a court order to identify employees leaking information to bloggers about yet-to-be released products.

While Apple initially won the right to subpoena the bloggers, an
appeals court overturned the earlier decision.

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