HP chairman to stand down over ‘spying’ scandal

Patricia Dunn is to step down as HP’s chairman following the “spying” scandal that has engulfed the company.

Patricia Dunn is to step down as HP’s chairman following the “spying” scandal that has engulfed the company.

Dunn will remain as chairman until 18 January next year, and will then be replaced by Mark Hurd, who is already the company’s chief executive officer and president. Hurd will retain his existing posts.

Dunn will continue to serve as a director after 18 January, said HP. After becoming concerned about media leaks from the board, Dunn initiated an investigation using an outside company.

That company then used a sub-contractor who used “pretexting” to check the phone records of HP board directors and US journalists.

Pretexting involves investigators contacting a phone company pretending to be a legitimate customer. HP is now facing an investigation by the US attorney general’s office in San Francisco over whether any laws were broken as a result of the spying.
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 apologise that they were employed.”

Hurd said, “I am taking action to ensure that inappropriate investigative techniques will not be employed again. They have no place at HP.

“HP holds itself to the highest standards of business conduct and we are accountable to these standards for everything we do. The company will work to put these matters behind us so that we fully resume our focus on the business and continue to earn the trust and support of our customers, employees and stockholders.”

Dr George Keyworth II, an HP board member since 1986, has resigned from the board with immediate effect after the previous HP disclosure that he had leaked board discussions to the media.

Keyworth initially refused to go and the board said he would not be re-appointed once his term was up.

Another director, Tom Perkins, had already resigned over the investigation, claiming he objected to the spying. There is no suggestion that he had leaked any details to the media.

Keyworth said, “The invasion of my privacy and that of others was ill-conceived and inconsistent with HP’s values. I acknowledge that I was a source for an article that appeared in January 2006.

“I was frequently asked by HP corporate communications officials to speak with reporters - both on the record and on background - in an effort to provide the perspective of a longstanding board member with continuity over much of the company’s history.

“The comments I made to the reporter were, I believed, in the best interest of the company and also did not involve the disclosure of confidential or damaging information.”

HP said, “The board does not believe that Dr Keyworth’s contact with a reporter in January 2006 was vetted through appropriate channels, but also recognises that his discussion with the reporter was undertaken in an attempt to further HP’s interests.”

Dunn expressed regret for the intrusion into his privacy, said HP.


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