Lawmakers denounced the intrusive tactics used in Hewlett-Packard Co.’s spying probe as a congressional hearing opened today with stark comparisons between the tawdry affair and the 67-year-old company’s reputation for integrity.
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 – appeared before the House Energy and Commerce Committee and asserted their Fifth Amendment right against self-incrimination, refusing to answer questions.
Ousted HP Chairwoman Patricia Dunn, sitting with her attorney in the front row of the packed hearing room, listened as members of the House Energy and Commerce Committee voiced outrage at the company’s probe into the source of boardroom leaks.
HP, the nation’s 11th-largest company by revenue, used a shadowy network of private investigators who burrowed into the personal lives of journalists and HP directors, and impersonated them with a tactic known as “pretexting” to obtain their telephone records.
“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.
Rep. Ed Whitfield, R-Ky., 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 Rep. Diana DeGette of Colorado, the panel’s senior Democrat. “Something has really gone wrong at this institution.” Dunn planned to testify that she discussed the conduct of the company’s leak investigation with CEO 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, HP’s corporate casualties have mounted. The computer and printer maker announced Baskins’ resignation just ahead of the hearing. Dunn, two other directors and two high-level employees have also stepped aside.
Hewlett-Packard, the world’s largest technology company and a respected anchor of Silicon Valley, engaged a private detective firm in quests to trace and stem boardroom leaks to journalists of confidential information. The firm in turn hired a network of investigators who masqueraded as HP directors and employees and as reporters to obtain their telephone records, surveilled them and their relatives, sifted through their garbage, and used an e-mail sting to dupe one of the reporters.
“I never doubted … that what they were doing was legal,” Dunn said in her prepared testimony, which was released by the committee on Wednesday.
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.” Dunn disclosed that she learned in the spring of 2005 that the probe involved obtaining access to phone records.
Besides the inquiry by the House 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.” Besides Dunn, Hurd and Baskins, Larry Sonsini – HP’s outside lawyer and one of Silicon Valley’s most influential figures, who assured company executives of the legality of the spying probe – agreed to appear at the hearing.
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.
The 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 were up 0.6 percent at $35.59 on the New York Stock Exchange as the hearing was underway midday today.
