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September 6, 2006 (IDG News Service) -- All's not well in the upper echelons of Hewlett-Packard Co., as revealed in a filing the company made to the U.S. Securities & Exchange Commission.
The brouhaha relates to the sudden and unexpected resignation of Silicon Valley venture capitalist Thomas Perkins from HP's board of directors in May. The co-founder of leading IT investment firm Kleiner Perkins Caufield and Byers, Perkins has strong ties to HP dating back to the 1960s, when he ran the company's research department, as well as a previous stint on HP's board of directors.
In May, HP provided no reason for Perkins' resignation. But according to an 8-K filing HP made to the SEC today, he quit over concerns with the board's handling of investigations into leaks of confidential information.
In the filing, HP confirmed that the company has suffered "multiple leaks of confidential HP information," including information relating to the closed-door deliberations of its board, dating back to at least 2005.
To try to stem the leaks and identify the culprit, HP turned to an external legal counsel who interviewed the board's directors in early 2005 and got each of them to recommit to their duty of confidentiality. The interviews didn't turn up the party responsible, and the leaks continued.
HP then brought in an external specialized investigations firm that revealed that George Keyworth, an HP director since 1986, has been disclosing board deliberations and other confidential information to the media without authorization. At a board meeting on May 18, Keyworth acknowledged he had leaked information and was asked to resign.
Keyworth refused to do so, and at that point Perkins announced his own resignation, citing "personal frustration" with the chairman of the board in how the whole leaks investigation was handled, the filing said. Perkins didn't like the matter being aired before the entire board and had believed that he and HP Nonexecutive Chairwoman Patricia Dunn would handle the matter privately.
On June 19, Perkins sought information from HP about the methods used to probe the leaks. According to the filing, he "asserted that phone and e-mail communications had been improperly recorded as part of the investigation." HP responded that there had been no recording or eavesdropping, but admitted "that some form of 'pretexting' for phone record information, a technique used by investigators to obtain information by disguising their identity, had been used."
In pretexting, investigators call a phone company and use personal information to pretend to be someone else so as to gain access to that individual's phone records.
After receiving the HP response, Perkins asked HP's nominating and governance committee to carry out an inquiry into whether the techniques used to conduct the investigation were appropriate. The vendor went ahead and engaged outside counsel, not previously involved in the earlier inquiries, to conduct such an investigation. The counsel discovered that a third party retained by the external consulting firm HP brought in to investigate the leaks "had in some cases employed pretexting."
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