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 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 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 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.

HP in the hot seat
Where the House and other inquiries into HP's methods stand.

The operation detailed in the e-mails reported by the Post concerned CNET 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 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. never reported on the apparent tip; HP later used the Infinity symbol for one of its server lines.

According to previous reports by CNET, 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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Guilt by association
This story is written in a way the juxtaposes elements which are not illegal (such tracked email and having a PI watch someone) and Bill Lockyear's stated intent to prosecute the pretexting fraud allegedly involved. That creates the impression that Mark Hurd and HP's ethics director will be the subject of criminal charges. Is that impression accidental or intentional?
Posted by (2 comments )
Reply Link Flag
Sleep with the dogs, wake up with the fleas
Mark Hurd's days are numbered. You heard it here first.
Posted by Too Old For IT (351 comments )
Link Flag
Hurd's Line in the Sand
Mark Hurd'll probably come out looking pretty clean after all is said and done. Last week he drew a line in the sand and has tried to distance himself from Patricia Dunn and her bad business practices put the whole organization's credibility on the line:

"Inappropriate investigative techniques will not be employed again, they have no place in HP." <a class="jive-link-external" href="" target="_newWindow"></a>

His approval of the bogus product specs emails sent to CNET's Dawn Kwamoto won't cause his downfall.
Posted by marileev (292 comments )
Link Flag
Media serving their own agenda
Scandal has been fodder for "news" likely for as long as humans could communicate, so it is no surprise that this scandal is in the news.

The slant of the stories, and the disparity of coverage between the leak aspects and the investigation aspects of the scandal appear to be at least in part rooted in the fact that the media was on the "wrong" side of the leak, and the "right" side of the certain aspects of investigation.

While illegal activity should be prosecuted and condemned, aggressive investigation is a reasonable and proper response to the unethical and possibly illegal activity involved in the leak.

It seems that the reporters of this story are painting the investigation as wrong because there own were being investigate.
Posted by son of a computer (5 comments )
Reply Link Flag
It seems that the reporters of this story are painting the investigation as wrong because their own were being investigated.
Posted by son of a computer (5 comments )
Link Flag
Ethics Lawyer couldn't have been . . . . . .
HP's board and counsel for ethics couldn't have been too ethical now could they? If they figured (which most people's ethics are, "don't get caught") they could do what nobody is supposed to be able to do. That is brake laws and think they were going to get away with it.
Posted by tech_no_man (11 comments )
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How ironic!
Has anybody picked up on the irony of this huge kerfuffle over some questionable, possibly illegal, actions to find a leaker when at the same time the President is trying to pass a bill to make torture legal, contravening the Geneva Convention?
Posted by choc1 (1 comment )
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How Ironic
It amazes me that people spend so much time going after the president and deriding his efforts against terrorism and mention nary a comment about the extreme islamists beheading our countrymen on television.

Go read the bill that congress is working on and get a clue.
Posted by drfrost (467 comments )
Link Flag
Are we really surprised?
After all that has been exposed of H-P's actions and questionable ethics through the past week, are we really surprised to find that the company's CEO was aware of the scandal? I don't think so, but it will be interesting to see how the rest of this all plays out.

The only thing that is truly surprising to me is that H-P, one of the largest computer-based technology firms in the world, did not employ more secure communications measures in the transmissions of highly questionable, and possibly illegal, e-mails. If people are not aware of the threats of e-mail security they should check <a class="jive-link-external" href="" target="_newWindow"></a>. However, you'd think H-P would know these things...
Posted by bayny (12 comments )
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I like to be spied on.. makes me feel important.
Posted by lewissalem (167 comments )
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