HP faces probe after 'spying' on director

The scale of in-fighting on the board of HP has been revealed in a company filing with the US Securities and Exchange Commission (Sec).

The scale of in-fighting on the board of HP has been revealed in a company filing with the US Securities and Exchange Commission (Sec).

The Sec filing revealed that one director had consistently leaked information to the press – leading to him being spied on by the company.

The in-fighting and subsequent fall-out has led to the attorney general of the State of California to request information concerning the processes employed by HP in its investigations into the leaks. The attorney general is considering whether the company had broken the law in its methods.

Sec is examining whether the company made a full disclosure when it announced the resignation of a board member in May.

In May, HP announced the resignation of Thomas J Perkins from its board. The Sec filing said that at the time of his resignation Perkins did not provide any written communication to HP concerning the reasons for his resignation. 

Following his resignation, Perkins notified HP that he had concerns with the HP board’s handling of investigations that had been conducted into leaks of confidential HP information from meetings of the board.

The Sec filing revealed that HP had been the subject of multiple leaks of confidential HP information, including information concerning the internal deliberations of its board.

HP believed these leaks dated back to at least 2005. In response to the leaks outside legal counsel conducted interviews with directors in early 2005 in order to determine the source of the leaks and to obtain each director’s reaffirmation of his or her duty of confidentiality. 

The interview process did not find the source of the leaks though, and the leaks continued. As a result, an internal group within HP, working with a licensed outside firm specialising in investigations, conducted investigations into possible sources of the leaks.

Those investigations resulted in a finding that Dr George A  Keyworth II, one of HP’s directors, did, in fact, disclose board deliberations and other confidential information obtained during board meetings to the media, without authorisation. 

At a board meeting in May, Keyworth acknowledged that he had leaked confidential information, and the board asked for his resignation. But Keyworth refused to go.

Perkins then resigned from the board after expressing personal frustration with the chairman of the board (Patricia Dunn) relating to the handling of the matter.

He stated that he objected to the matter being brought before the full board and that he believed the chairman had agreed that he and she would handle the matter privately. 

The chairman disputed Perkins’ assertion, explaining that she was complying with advice from outside counsel on the appropriate handling of the matter. 

In June, Perkins sought information from HP concerning the methods used to conduct HP’s investigations into the leaks, and asserted that phone and e-mail communications had been improperly recorded as part of the investigation. He informed HP that he had consulted with legal counsel regarding that assertion.

In its Sec filing, HP said it informed Perkins that no recording or eavesdropping had occurred, but that some form of “pretexting” for phone record information, a technique used by investigators to obtain information by disguising their identity, had been used. 

Perkins requested that HP conduct an inquiry into the propriety of the techniques used to conduct the investigation.

HP then engaged outside legal help to conduct an inquiry into the conduct and processes employed in the investigations.

It was found that the outside consulting firm used in the investigations had used another party to obtain phone information concerning certain calls between HP directors and individuals outside of HP. 

HP had been told by its outside investigators that their methods were legal, but the attorney general is now investigating whether this is the case.

In August, the HP board determined that, based on his conduct, Keyworth should not be nominated for another term on the board.


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