September 20, 2006 10:30 PM PDT

HP's chief executive linked to journalist probe

Hewlett-Packard CEO Mark Hurd has for the first time been linked to an elaborate sting operation targeting a CNET News.com reporter that lies at the heart of the company's attempts to determine the source of a boardroom leak.

The Washington Post reported on its Web site late Wednesday night that an internal e-mail sent by HP Chairman Patricia Dunn indicated that Hurd approved of an e-mail ruse involving a CNET News.com reporter. The ruse focused on planting a bogus news tip that, it was hoped, would be followed up and then lead back to the internal HP leak.

It is unclear whether HP's probe, which has generated numerous investigations and a flood of bad publicity over the company's ethics, broke any laws. But it has led to a criminal investigation by California's attorney general and a congressional hearing scheduled for Sept. 28.

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None of the e-mails that the Post obtained was to or from Hurd, but some of them specifically mentioned his knowledge and approval of the scheme.

Hurd plans to hold a press conference at HP's Palo Alto, Calif., headquarters Friday at 1 p.m. PDT, after the stock market's close, to discuss the actions the company is taking in the aftermath of its probe. The press event, which will also be available as a Webcast, will also feature a representative from the outside law firm of Morgan, Lewis & Bockius, who will "provide information regarding the investigation of the leaks," according to a statement issued by HP on Thursday.

"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," Hurd said in the statement. "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."

HP has come under fire for employing the legally questionable practice of "pretexting," or obtaining personal information under false pretenses. HP has said the personal phone records of board members, two HP employees, nine journalists, including three CNET News.com reporters, and an unknown number of other people were accessed by investigators hired by the company to look into news leaks.

The firestorm of controversy led to HP's announcement last week that Dunn would step down as chairman in January and turn over that job to Hurd. Dunn will remain a director. Director George Keyworth, the source of the leaks, also resigned from the board last week. Tom Perkins quit the board earlier this year to protest the investigation.

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The operation detailed in the e-mails reported by the Post concerned CNET News.com reporter Dawn Kawamoto, who reported in January on a strategy meeting for directors and executives. Just days after that story was published, Kawamoto received an e-mail from someone posing as an HP tipster, government investigators have told Kawamoto.

A later e-mail from the fake tipster included an attachment believed to have contained marketing information about a new HP product. That attachment, government investigators told Kawamoto, is believed to have had the ability to track the e-mail, notify the sender if it was opened, and tell the sender if the e-mail was forwarded and to which IP address it had been forwarded.

People briefed on HP's internal probe say that it was authorized by Dunn and put under the supervision of Kevin Hunsaker, a senior counsel who is the company's director of ethics, according to the Post.

In a Feb. 9 e-mail reviewed by the Post, Dunn informed Hunsaker and HP General Counsel Ann Baskins that "I spoke with Mark and he is on board with the plan" and that "he also agrees that we should consider doing something with" the data-farm tip.

In another e-mail cited by the Post, Hunsaker told Dunn on Feb. 23: "FYI, I spoke to Mark a few minutes ago and he is fine with both the concept and the content."

Kawamoto never wrote a story based on the bogus information, but HP's surveillance continued in some manner through at least March, she was told.

However, the report by the Post does not cleanly match the e-mails that Kawamoto received.

The Post reported that the e-mails were to describe a "new handheld product," but the e-mails received by News.com actually involved a purported rebranding of HP's so-called utility computing initiative for high-end corporate customers.

One e-mail included an attachment with what appeared to be marketing material that linked the name "Infinity" to HP's utility computing business. News.com never reported on the apparent tip; HP later used the Infinity symbol for one of its server lines.

According to previous reports by CNET News.com, HP investigators also employed physical surveillance on Kawamoto for three days starting on Feb. 9, she was told. One note by the investigators said: "Morning of Feb. 10: surveillance resumed on DK and on other subjects." Included in the notes is at least one surveillance photo of Kawamoto.

California Attorney General Bill Lockyer said in a television interview last week that his office believes it has enough information to bring charges against people both inside and outside the company.

The government's pretexting investigation is expected to widen in the coming weeks.

A congressional subcommittee has asked Dunn and Baskins to appear at a Sept. 28 hearing about the company's surveillance methods. The House Committee on Energy and Commerce also sent letters asking HP outside counsel Larry Sonsini and outside investigator Ronald DeLia to testify as part of the daylong hearing.

The committee has received indications that Dunn and Baskins will testify but has yet to receive a formal confirmation letter. Sonsini also plans to testify, but it's unclear how much he will be able to say, given that much of his work for HP may be covered by attorney-client privilege.

See more CNET content tagged:
Mark Hurd, Dawn Kawamoto, leak, Patricia Dunn, reporter

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