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September 22, 2006 1:56 PM PDT
HP chairman resigns, CEO confirms knowledge of probe
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However, Hurd also confirmed on Friday that he knew about several key phases of the investigation and attended meetings at which the investigation was discussed. Hurd said he was e-mailed a report summarizing the investigation but that he did not read it.
"I could have, and I should have," he said. At the same time, Hurd said the investigation was necessary. "I feel strongly that leaks hurt the company's reputation and its ability to operate effectively. It was the responsibility of the HP chairman to pursue the leak situation."
Attorney Michael J. Holston, a partner at the law firm Morgan, Lewis & Bockius, said the report "outlined the source of the leaking and outlined the investigative techniques involved--including pretexting." In addition to being sent to Hurd, it was also sent to Dunn and HP General Counsel Ann Baskins, according to Holston.
The press conference, in which questions from the press were not permitted, comes ahead of a congressional committee hearing next week. Meanwhile, the California attorney general and federal authorities are pursuing criminal investigations.
On Friday, Hurd gave more details on his knowledge of the probe into the boardroom leaks and said he hired law firm Morgan Lewis earlier this month to investigate the matter.
"I believe we have now a substantial set of the facts," Hurd said. "I will also say that some of the findings that Morgan Lewis has uncovered are very disturbing to me."
Holston detailed the involvement of several other HP employees in the leak probe, including Baskins. And he confirmed many elements of the investigation's time line, which had two phases, as well as the outside firms, including investigation firm Security Outsourcing Solutions, that were involved.
Morgan Lewis has collected more than 1 million pages of documents, according to Holston. He said the firm has reviewed "many of those pages." "We are committed to reviewing the remaining documents as fast as we are able," he said.
He promised a further inquiry into the matter. "Our investigation is not complete. There is still more work to be done," he said.
Hurd emphasized that it's a complicated situation, that keeps getting more complex.
"As of today, we still do not have all of the facts," Hurd said. "I also cannot guarantee that we will ever be able to obtain all of the information regarding this investigation. This is due to its complexity, the number of people involved, with many of them outside the company."
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HP's CEO Mark Hurd speaks
Complete audio of HP's CEO Mark Hurd on his company spying on reporters and HP officials to stop media leaks.
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Lawyer details HP investigation Morgan Lewis lawyer Mike Holston outlines what his company's investigation has learned.
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HP said that the investigation had two phases. The first phase, dubbed Kona I, stretched from early 2005 to late summer 2005 and the second, called Kona II, began in January 2006, when CNET News.com published a story that reported on an HP board meeting, Holston said.
But there is still some confusion around the time line of HP's investigation.
Kona I may have concluded by late summer 2005, but HP apparently kept looking for leaks. In January 2006, HP's investigative contractor, Security Outsourcing Solutions, had an investigator keep an eye on an offsite board meeting to "determine if any journalists were seen at or around the site," said Holston.
He also said after News.com wrote its Jan. 23 article detailing that board meeting, the leak hunt resumed. But government investigators have told two News.com reporters that their personal phone records were accessed the week before that story was published.
In fact, News.com reporter Tom Krazit was told his phone records were accessed on Jan. 20, the same day he contacted Robert Sherbin, HP's vice president of external communications, for comment in advance of the story. Sherbin told News.com he had been asked to alert other HP officials of potential leaks, but did not remember who he contacted about his discussion with Krazit. Reporter Dawn Kawamoto was told by government investigators that her phone records were first accessed on Jan. 17.
Holston said the first investigation was inconclusive, while the second probe did uncover the source of the leaks. "During the course of Kona II, certain members of the investigation team provided assurances that the techniques being used in the investigation were legal," Holston said.
"The investigation included tactics that ranged from the review of HP's 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.
While these tactics had already become public, Holston also disclosed for the first time on Friday that investigators may have gone through people's trash in February 2006, though the company would not say whose trash may have been accessed.
In the second phase of its investigation, HP also sent CNET News.com reporter Dawn Kawamoto a bogus e-mail tip that included an electronic tracer designed to reveal the IP address of anyone who received a forwarded copy of the e-mail.
HP's boardroom drama
Although the journalist corresponded with the fake informant, "the investigation team never received any confirmation that the tracer was activated," Holston said.
Hurd said that he approved the sending of a bogus tip, but did not approve the use of the tracking technology.
"I was asked to and did approve the naming convention that was used in the content of the e-mail," Hurd said. "I do not recall seeing, nor do I recall approving, the use of tracer technology." Holston said the Morgan Lewis inquiry also found no evidence that Hurd was asked to approve use of the tracer.
On other surveillance methods, Holston said the Morgan Lewis investigation does not show any indication that computer keystrokes were tracked. Also, while a PowerPoint presentation detailing the investigation does discuss potential "undercover operations" at the San Francisco offices of the Wall Street Journal and CNET Networks, there is nothing that shows this actually occurred, he said.
As for the physical surveillance, Holston said investigators staked out a January board meeting to see if any journalists were nearby. Also, an investigator followed an HP board member on a trip to a conference in Colorado in early 2006 and observed him, his spouse, and possibly other family members at his California home.
In February 2006, investigators surveilled a journalist at her residence, Holston said. In all cases the surveillance was done by SOS, Holston said.
During the investigation, HP or its investigators also obtained Social Security numbers of four reporters, three board members and one employee, Holston said. The identifying numbers, typically considered confidential, were used for the purpose of getting their phone records.
Holston also said that HP is "not currently aware of any investigation into leaks continuing after May 18, 2006."
Dunn isn't the only person to leave HP. Kevin Hunsaker, senior counsel and HP ethics director, and Anthony Gentilucci, an HP global investigations manager in Boston, are in the process of leaving the company, according to sources familiar with the matter. Those departures may not be the last related to the matter, a source said.
Board member Richard Hackborn was named lead independent director. In addition, HP has hired Bart Schwartz, a former U.S. prosecutor, as counsel to perform a "forward-looking and independent" review of HP's investigative methods and the company's standard of business conduct processes, Hurd said. "This will ensure we have the appropriate level of rigor and discipline so we can be assured that this type of situation can never happen again," he said.
Despite acknowledging some involvement, Hurd pledged to further investigate the matter and attempt to "take full accountability" to set things right.
"Our job is to fix this and get back to the job of running a business," he said. (Click here for a PDF transcript of Hurd's remarks.)
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24 comments
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bayny, I'm on the fence. As long as Hurd can balance disavowing his role in it I think he can maintain his position with HP. The guy really brought the company out of the darkness after Carly Fiorino's departure.
But then again, Patricia and all her fellow conspirators in this affair made their choice of their own free will and now must live with the consequences, and fall on their respective swords to resign in disgrace is a better option!
Still, it wive give rise to the next Wall Street in joke!, when publishing a critique of any company/corporate senior exec. "say have you heard the latest, I am now in the big league ,all my phones, friends and parents have been investigated and pretexted by a Patricia Dunn 'done wrong' clone!, for my latest article!"
Now then, if the all the shareholders could raise enough voting proxy shares to outrank and dump all the all boardmembers period!, at the next annual general meeting, that would go a long way to start cleansing process!
Oh well, time is not on his side now!
I don't for a second buy his ascertain that he didn't read it or know what was going on, the fact that HP's leak situation probe was such a big deal implies he's either a lier, a fool, or just plain stupid. It matters little which one it is, he doesn't belong as Chairman.
Am I biased? You bet! In December 2005, I bought my first H-P computer, a Compaq Presario SX1522X, and I am sorry I did. I have had nothing but problems with this computer and wish I could get a refund on it.
By comparison, my 23-year-old Apple IIe is on the desk behind me and still works beautifully.
H-P's pretexting fiasco will probably be the tip of the iceberg. What other evils lurk in the shadows of H-P?
"Don't blame the computer for what Windows does".
CNET has more coverage on corp. governance here:
<a class="jive-link-external" href="http://news.com.com/Has+HP+done+enough+in+corporate+governance/2100-1014_3-6118799.html?tag=cd.top" target="_newWindow">http://news.com.com/Has+HP+done+enough+in+corporate+governance/2100-1014_3-6118799.html?tag=cd.top</a>
The statement made during her awards says it all, "I understand rich, I will never understand famous." Understands rich, why patty? I am Rich and I can do anything I want and there is nothing anybody can do about it. I know I have been around people of wealth enough to know how most them think. But I digress!
Likewise, Hurd claims he never read the E-mail.
During a secret and potentially hot investigation such as this, why would Hurd NOT read such an important piece of E-mail.
Hurd as well as the Ethics chairman along with the entire board's credibility is on the line here.
Just how many more were included on that addressee list and who was the sender?
The sender sent it to those in the know and thus knowing who the sender was will be a good point to investigate and find out more info about exactly whom knew about what and when!!!
Walt
Walt
Either someone on the board would have obtrained those numbers and transmitted them to SOS, or they would have authorized HR to divulge this private information to SOS.
That is one area where details have not yet been made public.
I don't think Dunn's resignation was due to the revelation that Hurd was also involved, but rather because what is to come is going to be very damaging to her.
Hurd underlined that he now knew much of what had really happened. This means that current decisions are being taken to prepare the media for what is to come and hopefully defuse bombs before they explode.
With Dunn gone, any bad news about Dunn won't impact HP as much.
Furthermore, by firing Dunn now, she probably gets a nice golden parachute. If they waited for charges to be laid against her, she would probably be fired for "good cause" and not get any compensation.
<a class="jive-link-external" href="http://www.theage.com.au/news/Technology/HPs-ethics-chief-pointed-investigator-toward-directors-suspectedof-leaking-email-shows/2006/09/23/1158431932837.html" target="_newWindow">http://www.theage.com.au/news/Technology/HPs-ethics-chief-pointed-investigator-toward-directors-suspectedof-leaking-email-shows/2006/09/23/1158431932837.html</a>
I don't mean the company as a whole but I do mean the corporate structure and particularly the board and Legal counsel areas.
I hope Mark Hurd survives this but as new revelations seem to be unfolding daily that is a lgitimate question.
I have a few specimens in my lab. HP monstrosities, picked up at the consumer level and quaranteened. Has anyone managed to pick through the myriad of applications that bury themselves into an HP home system when it is setup or recovered from the pay-for recovery disks? Hint: how much information have you given away in the last year alone? Yes!, let us do an investigatiion if we are serious about understanding what precisely is going on at HP.
The first thing that is abundantly striking is that we all brandish huge sticks when it comes to insistances on having the best and brightest, the most up to date, and the highest level of diligences, front and center in our technology employees. Getting huge sums of money dumped on you for an executive postion is not a reason to suddenly dispense with your intelligence, duty of care or moral tenacity.
I do not believe for even a fraction of a second that Hurd did not read the report!! Pointe finale!! No way! You are an executive and so called 'captain of industry' (hmmm) because you have that great power to be able to examine all the detail. What a sad state of affairs that the technologists ARE the best and lead by a group of senior/executive ninnies and incompetents. Ahh but this is more and more the American way of life. America the brave and the free revells in the gross negligence and moral turpitude of its business executives.
Anxious to dispense with discoveries, the quick and clean, always acceptable method in America is to, make someone resign. Problem solved, game over, no problem, 'that was somebody else' doing all that bad stuff. The woefully inadequate solutions provided by HP, and all of the North American public and private sectors, is the dissociative pronouncement of a "guilty party".
One day when the coffee is not quite as thick and the morning air a little fresher it will be like a proverbial ton of bricks when it is realized no one does, or ever has, bought into this ideology which is meant o suggest that a proper punishment has been doled out in fair and objective fashion.
"Very disturbing to me". Hahahaha HA ha... [http://Forgive me here for a moment.|http://Forgive me here for a moment.] I persisted for months presenting Hurd with very disturbing facts,... is the public really so naive that they might for a second think he cares!!!?
Why are we still relying on HP to conduct its own "investigation" into its own "investigation"?
"Complicated situation"?!?!? "Complex"?!?!? There is nothing in here that is either 'complex' or 'complicated'. The U.S. should have had in place, decades ago, real check and balances, a control on how business conduct themselves rather than a faux posturing of righteous indignation.
And there is that legal jargon again first deployed in the Mesozoic Era, " I do not/can not recall". Oh! Gosh, just a minute while I hold my sides.
'Millions of pages', well this is all to difficult for me to fathom, I think we should just get someone to resign and call it even.