HP Scandal Moves To Criminal Court

Former HP Chairwoman Patricia Dunn, four others face charges over pretexting

California Attorney General Bill Lockyer late last week filed felony charges against former Hewlett-Packard Co. Chairwoman Patricia Dunn, a former HP legal counsel and three private investigators for their alleged roles in the company’s boardroom leak scandal.

Lockyer’s complaint, filed in Santa Clara County Superior Court, ensures that headlines about HP’s use of private telephone billing records to find a board member who leaked information to journalists will continue to dog the company.

Dunn’s attorney, Jim Brosnahan of Morrison & Foerster LLP in San Francisco, is promising a fight to clear the former chairwoman. In a statement, Brosnahan called Dunn the victim “of a well-financed and highly orchestrated disinformation campaign.”

AG Critical of Company

In addition to charging the group with violating privacy laws, Lockyer admonished the Silicon Valley corporate icon itself. In a thinly veiled reference to the so-called “HP Way” created by company founders Bill Hewlett and David Packard, Lockyer said that the company had “lost its way.”

In addition to Dunn, the state filed charges against Kevin Hunsaker, former senior counsel and ethics chief at HP; Ronald DeLia, managing director of Boston-based Security Outsourcing Solutions Inc., an HP security contractor; Matthew Depante, manager of Action Research Group, a Melbourne, Fla.-based company described by the state as an “information broker;” and Bryan C. Wagner, a Littleton, Colo.-based employee of the research group.

All five face charges related to the use of pretexting, or “false and fraudulent pretenses,” to obtain telephone billing records of 12 people, including journalists, HP board members and HP

HP Charges

Patricia Dunn and four others have been charged with:

•  Fraudulent wire communication

•  Using personal identifying information of another to obtain credit, goods or services in that person's name

•  Wrongful use of computer data

•  Conspiracy

Dunn and Hunsaker each appeared briefly in court last week. Dunn is scheduled to be arraigned on Nov. 17 and Hunsaker on Dec. 6. The three private investigators will likely appear in court this week.

While some HP users see CEO Mark Hurd’s handling of the scandal as a test of his management skills, many have said over the past several weeks that the episode will likely not affect their relationships with the company.

For example, Rajesh Narang, chief system manager at the Centre for Railway Information System, Chanakya Puri, New Delhi, said late last month that the scandal “in no way” will affect his decisions to purchase products from HP.

“It is in our interest to keep our relationships with HP alive,” Narang said. “Otherwise, there are only two more players in enterprise class of servers — IBM and Sun, who can take advantage to increase the prices.”

It was only early last month that details about the boardroom leak investigation emerged publicly, when HP disclosed it in a filing with the U.S. Securities and Exchange Commission. Details of the company’s efforts to plug the leak caused an uproar, which culminated less than two weeks ago with a daylong, packed hearing before a subcommittee of the U.S. House Committee on Energy and Commerce.

“There seems to be a fundamental disconnect between the severity of the charges for the people who have been indicted and what the market thinks about this,” said Charles King, an industry analyst in Hayward, Calif. “The market seems to be shrugging off all this stuff.”

However, King noted that maintaining that view is contingent on how Hurd’s actions affect his reputation. Hurd was also named chairman of HP following Dunn’s resignation from the post on Sept. 22.


Copyright © 2006 IDG Communications, Inc.

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