Hurd says he okayed probe; Dunn resigns

Hewlett-Packard Co. Chief Executive Officer (CEO) and President Mark Hurd Friday confirmed that he approved a probe of HP employees, board members and journalists in an effort to find out who on the HP board was leaking confidential information outside of the company.

However, Hurd said he did not approve the placement of tracing technology in an e-mail to a journalist, and apologized for this and any other “inappropriate” tactics — such as physical surveillance and obtaining phone records under false pretenses, known as “pretexting” — that HP undertook in its investigation to find the source of information leaks.

“I extend my sincere apology to those journalists who were investigated and to everyone who was impacted,” Hurd said. “The inappropriate techniques that were applied do not reflect the values of HP. … These are not indicative of how we conduct business at HP.”

Hurd also said he accepted the resignation of Patricia Dunn from her position as chairman of the HP board and a director, effective immediately, and thanked her for her eight years of service on HP’s board. Previously, Dunn was to stay on as a director of the board, but would step down as chairman in January. Hurd now takes on the role of chairman of HP’s board.

HP also Friday appointed Bart M. Schwartz, a former U.S. prosecutor, as board counsel. His role will be to perform an independent review of investigative methods and the company’s Standards of Business Conduct processes, and to make future recommendations for implementing best practices. He will report to Hurd and HP Chief Financial Officer Bob Wayman.

Hurd said that HP had the “best intentions” when it began the first of two phases of a probe into boardroom leaks, but said it “turned in a direction we could not have anticipated” and he takes full accountability for what transpired.

“I take this very seriously and commit to getting to the bottom of this,” he said. “Our job is to fix this and get back to the job of running the business.”

Hurd did not field reporter questions at the press conference, at which HP searched attendees’ bags and did not allow video cameras. Hurd plans to appear at a U.S. House of Representatives Energy and Commerce Committee Subcommittee on Oversight and Investigations hearing about HP’s investigation on Thursday, Sept. 28., and said he did not want questions on Friday to interfere with that testimony.

Mike Holston, a partner with law firm Morgan, Lewis & Bockius LLP, also spoke at the press conference on Friday. HP appointed the firm, which reports directly to Hurd, on Sept. 8 to investigate the tactics used by HP and third-party investigators in its probe.

Holston said his firm has read more than 1 million pages of documents about two internal HP investigations — called Kona 1 and Kona 2 — and is still in the process of putting together the details of what took place. He declined to identify by name the people HP investigated.

However, Holston did confirm that HP worked with two third-party organizations — Security Outsourcing Services and Action Research Group — to investigate employees, board members and/or former board members and their families, and journalists and their families.

That investigation included physical surveillance, obtaining social security numbers of those being investigated to obtain phone records and the placement of e-mail tracing technology in an e-mail to one journalist, he said.

Friday’s news conference followed a steady stream of news reports over the last two weeks with revelations of actions HP and its outside investigators allegedly took to discover the source of company leaks to the media.

Schemes allegedly considered included an attempt to plant spies inside the San Francisco newsrooms of The Wall Street Journal and CNET Networks Inc. posing as clerical workers or janitors, and a sting operation in which a fake anonymous source within HP would e-mail CNET reporter Dawn Kamamoto with a tip and track her e-mails to see if she contacted her other HP sources about the tip.

Holston said Friday that while there was evidence that HP considered starting undercover operations in the newsrooms of the Journal and CNET, there is no evidence that such operations ever took place.

He also confirmed that HP did try to track one reporter’s e-mail through tracing technology, but did not name the reporter involved and said there was no evidence at this time that the HP investigation team was aware that the tracer was activated.

Hurd’s explanation helps distance him from the allegations of wrongdoing, but many questions remain, said Rob Enderle, principal analyst with the Enderle Group, of San Jose, California.

“I think it is allowing [HP] to separate Hurd from the process and make it more clear what Hurd’s role was or wasn’t,” said Enderle. “But, the way this [investigation] is ongoing you don’t know if that is always going to be the case.”

Enderle echoed Hurd’s comments that the use of pretexting and surreptitious spying on people is not consistent with HP’s way of doing business and that, as Hurd put it, they “were isolated incidents of impropriety.”

“HP is one of the most conservative companies on the planet. I can’t in my mind picture them approving this stuff if they knew exactly what it was they were approving,” Enderle said.

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