I took a few days in Vancouver, and while up in Whistler Village I ran into a friend who was a VP at Hewlett Packard until about 6 months ago. He gave me a short, fast but compelling insider's account of the scandal involving HP's Patricia Dunn, Chairman of the board, who engaged in an Illegal Surveillance of other Board of Directors in order to find a "leaker" who was divulging company secrets and strategy to industry journals and magazines, invariably affecting the stock price and causing other forms of Mayhem. My friend also worked closely with Tom Perkins, reknowned Venture Capitalist and HP Board member, known for his all around people skills and respect for individual rights and privacy. What Ms Dunn did in her effort(s) to find the corporate leaker, are actually unbelievably STUPID , even if the information being leaked was heavy duty company secrets.

First, consider this quote from Dunn, cited in numerous articles about the scandal:

Quote:

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Dunn said, “The recent events that have taken place follow an important investigation that was required after the board sought to resolve the persistent disclosure of confidential information from within its ranks. These leaks had the potential to affect not only the stock price of HP but also that of other publicly traded companies. Unfortunately, the investigation, which was conducted with third parties, included certain inappropriate techniques. These went beyond what we understood them to be, and I apologize that they were employed.

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The "inappropriate techniques" she is referring to are in fact what Willie D no doubt has heard of, a practice called "pretexting", whereby a individual pretends to actually be another person in order to get information about an account, or phone records, that would otherwise be difficult or impossible to get. Patricia Dunn Ok's having pretexters pretend to be the Board members of Hewlett Packard in order to get their Private phone records to identify CALLS made to the magazine that leaked a story back in September 2005. She was actually able to Identify the GUY who was the leaker, but Good Old almost-a-billionairre Tom Perkins laid into Ms Dunn about the tactics and ethical issues, and thus kicked off a shitstorm that now involves the State Atorney General and Congress, and could land Patty Dunn in Jail when all is said and done.

Now we all know WHY we need to protect our names and identity, because, armed with even a Modicum of personal information, I could in fact, call up a bunch of companies and agencies and, pretending to Be Smelly Monkey, ruin his life for the next 5 years. Of course, in that case, I wouldnt be acting Unethically but rather as the dispenser of Karma, but still, you all get the point.

My friend Quit HP amd now works for Google, FYI. He said the company is reeling from this scandal and NO ONE in the uppermost circles of management trusts anyone anymore.

Additional points:

Perkins quit over the illegal surveillance. SEC rules unambiguously require HP to make a public filing stating that he quit in protest, and why. HP still hasn't made that filing, months later. This is a major violation in my opinion, as bad as the original snooping. That's what Perkins went public about: HP wasn't disclosing that he quit in protest over something.

The illegal activities weren't just being run by some flunky, they were being supervised by the legal department (and, ironically, the “Chief Ethics Officer”). These are the guys who are supposed to make the rest of the company follows the laws yet they would have made Richard Nixon proud. If these guys are this bad, what do you think the sales guys are willing to do to make the quarterly numbers?

At least one internal memo stated that the pretexting methods were illegal. Even if this wasn't seen it is painfully obvious that you can't legally get such information. The legal department ignored an explicit warning and common sense that maybe a list of phone calls placed by the father of a reporter was maybe a risky thing to go for?

Why is the chief lawyer at HP still employed?

The first action the company took was to promote Mr. Hurd. Huh? Hurd specifically knew of and approved an e-mail attack on a journalist. Everything was done on his watch by people reporting though him. Maybe his culpability isn't that great for various reasons, but I see nothing in his behavior that screams “promotion!”

If these guys were willing to go this far with nothing personally on the line what would they be willing to do if presented with an Andy Fastow-like opportunity to line their pockets?

HP has long been a "weird" place in the Silicon Valley / Bay Area business club. I never had a project for them go off without a hitch, there was always something wrong and typically it was due to their weird rules and requirements for vendors, as well as themselves.

Hurd's promotion was slightly baffling, but it may change early next year when they shuffle the board around and elect new people or replace a few. Patricia Dunn may be in jail by then, who knows....it depends on whether the California State Attorney General needs headlines or a splash, and a few other considerations.

What's really strange is Ms Dunn's career started off in investigative journalism and reporting...she originally wanted to be a muckraker back in the late 70s when she was starting out in business, so perhaps her instincts and principles didnt change all that much even after she got into the tech industry. Bottom line, no one knows why she did this incredibly stupid action; JRV asks a valid question, that if they were willing to do this simply because someone on the Board was making points with a trade publication by divulging company secrets or strategic plans, what else might she have done, or would have done? HP is such a HUGE icon in the Silicon Valley, and in Tech/Mfg in general, that this is a serious issue.

The Stock Price also has been bounced around by all this bullshit, especially when Atty General Lockyer started tossing around threats of indictment (which will be fact very soon.) HP's Stock Price nose dived 6 percent last wednesday and into Thursday when Lockyer stated that even Hurd may be face criminal charges, depending on how much he knew prior to his promotion after Dunn stepped down recently. Several other reviews and info rags I have read are portraying HP as a chaotic mess now with a bunch of ham-handed people at the top trying to assert moral superiority as justification for them running the show. WTF? NO ONE is talking about new products or business strategy, etc. The stock is going to tank for the next year, if you own any, bail out now and take your lumps before it plunges to Under 20 bucks a share by early next year (right now, its about 36 bucks a share.)