Shake-Up At Hewlett-Packard

Chairwoman Patricia Dunn To Step Down As 'Pretexting' Scandal Widens

(CBS/AP)  Hewlett-Packard Chairwoman Patricia Dunn will step down in January and be succeeded by CEO Mark Hurd amid a widening scandal involving the computer and printer company's possibly illegal probe into media leaks.

Director George Keyworth II, who acknowledged sharing company information with reporters, resigned from HP's board later Tuesday morning. The board had asked Keyworth to resign in May, but he refused.

Hurd will retain his existing positions as chief executive and president and Dunn will remain as a director after she relinquishes the chair on Jan. 18.

"I am taking action to ensure that inappropriate investigative techniques will not be employed again. They have no place in HP," Hurd said in a statement Tuesday.

Dunn apologized for the techniques used in the company's probe, which included "pretexting" in which private investigators impersonated board members and journalists to acquire their phone records.

"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," Dunn said in a statement.

The pressure on Dunn to step down began rising sharply on Monday when Congress and federal investigators entered the fray surrounding HP's investigation. The FBI, the U.S. Attorney for Northern California and the House Energy and Commerce Committee all joined the probe of the scandal swirling around HP's Board of Directors.

Dunn was angry about the media leaks of confidential board discussions and commissioned an unnamed outside firm to identify their source. They used Social Security numbers and other personal information to get phone companies to turn over detailed logs of home phone calls of reporters and company directors.

Although frequently used by private investigators, pretexting tests the bounds of state and federal law.

"I just think it's inappropriate. It's really something that shouldn't happen," an HP employee told KCBS Radio's Matt Bigler. She asked that her name not be used.

Tom Krazit, one of the CNet reporters whose telephone records were obtained, said he's infuriated.

"The fact that someone on the board was leaking information, you can understand that they would not be thrilled with that, but to go to these lengths is something unbelievable," Krazit told KCBS' Doug Sovern.

"It doesn't appear to be all that hard if you have some money to spend and you know where to go," he said. "It's not a comforting thought."

At a board meeting in May, Dunn identified Keyworth as the source of a news article that appeared on CNET Networks Inc.'s News.com in January. The board asked Keyworth, 66, to resign, but he refused. HP then barred him from seeking re-election.

"The invasion of my privacy and that of others was ill-conceived and inconsistent with HP's values," Keyworth said.

His ouster riled another board member, longtime Silicon Valley venture capitalist Tom Perkins, 74, who resigned and stormed out of the May 18 meeting.

[wanderer1949]

What would you have done? When compared to what Keyworth did I feel Dunn did the right thing. Protecting corporate information in the high tech industry is an absolute MUST! Then after he is caught he acts like he did nothing wrong and that HP was the bad guy. Give me a break!

And then compared to what the Bush administration is doing to all Americans with his warrantless eavesdropping with no checks and balances, this is not worth wasting our time talking about.

[ronlevy1]

When inappropriate (illegal?) procedures are employed by a corporate board of directors, all of the directors have an obligation to resign. Directors are supposed to represent the shareholders and in the case of HP, that was not their function. Ms. Dunn is correct to leave but she should also leave the board along with all existing board members.