HP Execs On Hot Seat

Hewlett-Packard Co.'s ousted chairwoman told U.S. lawmakers on Thursday that she was assured by an outside investigator that the phone records of people targeted in a boardroom leak probe were obtained lawfully from public sources.

Patricia Dunn, testifying before the House Energy and Commerce Committee, said she was given ironclad assurances of the legality of the methods used in the company investigation and that the word "pretexting" — impersonating people to obtain their records — never cropped up in the conversations.

"I deeply regret that so many people, including me, were let down by this reliance" on such advice, Dunn told the panel.

A detective firm engaged by the company hired a network of investigators who masqueraded as HP directors and employees and as reporters to obtain their telephone records, conducted surveillance on them and their relatives, sifted through their garbage, and used an e-mail sting to dupe one reporter.

Like the HP directors and journalists who were targeted in the probe, she, too, was "pretexted," Dunn said.

Lawmakers denounced the intrusive tactics used in Hewlett-Packard's spying probe as the hearing opened with the stark contrast between the tawdry affair and the 67-year-old company's reputation for integrity.

"We have before us witnesses from Hewlett-Packard to discuss a plumbers operation that would make Richard Nixon blush were he still alive," Democratic Rep. John Dingell of Michigan said.

Republican lawmaker Ed Whitfield, chairman of the committee's investigative panel, demanded to know why, with many high-ranking HP executives and attorneys involved in the probe, "No one had the good sense to say 'Stop.'"

"It's a sad day for this proud company," said Democratic lawmaker Diana DeGette. "Something has really gone wrong at this institution."

Ten people involved in the company's cloak-and-dagger investigation of boardroom leaks — including HP's just-resigned general counsel, Ann Baskins, and hired private detectives — asserted their constitutional right against self-incrimination, refusing to answer questions.

Dunn planned to testify that she discussed the conduct of the company's leak investigation with chief executive Mark Hurd, board members and others in the company — getting a clear impression that the directors were satisfied with it and that its methods were not improper.

Dunn and Hurd were appearing at the hearing with other top executives and hired detectives. Some volunteered to testify; others were attending under the summons of a congressional subpoena.

As lurid details of the affair emerged in recent weeks, the corporate casualties have mounted at the computer and printer maker, which ranked 11th on Fortune magazine's most recent tally of the biggest U.S. companies. HP announced Baskins' resignation just ahead of the hearing. Dunn, two other directors and two high-level employees have also stepped aside.

Dunn said she asked Ronald DeLia, the operator of the detective firm hired by HP, "at every point of contact for his representation that everything being done was proper, legal and fully in compliance with HP's normal practices."

Besides the inquiry by the House of Representatives committee, federal and California prosecutors are investigating whether company insiders or outside investigators broke the law. California Attorney General Bill Lockyer has said he has enough evidence to indict HP insiders and contractors. And the Securities and Exchange Commission is pursuing a civil inquiry.

Hurd, who succeeded Dunn last Friday as chairman of Palo Alto, Calif.-based HP, apologized to those whose privacy was violated in the leak investigation.

"How did such an abuse of privacy occur in a company renowned for its commitment to privacy? It's an age-old story. The ends came to justify the means," he said in prepared testimony for the congressional hearing.

Hurd said Dunn had told him of the existence of the investigation, "but I was not involved in the investigation itself."

Larry Sonsini, HP's outside lawyer and one of Silicon Valley's most influential figures, also appeared at the hearing, urging Congress to clarify laws around pretexting. He had assured company executives of the legality of the spying probe.

The committee sought testimony from DeLia and two other key figures in the leak probe: Kevin T. Hunsaker, until recently the company's chief ethics officer, and Anthony R. Gentilucci, who managed HP's global investigations unit in Boston. They, along with outside investigators believed to have served as the foot soldiers in the company's efforts, took the Fifth.

That decision not to testify deprived the committee of an opportunity to hear an explanation of why HP higher-ups apparently dismissed one investigator's warnings that the probe was possibly illegal and would likely damage HP's reputation.

HP shares have been largely unaffected during the probe; investors are most concerned about the fate of Hurd, who is credited with engineering a remarkable turnaround in the company's performance in his 18 months as CEO.