San Jose, Calif. – Hewlett- Packard Co. agreed Thursday to pay $14.5 million to settle a lawsuit brought by state Attorney General Bill Lockyer accusing the company of unfair business practices in its crusade to unmask the source of boardroom leaks to the news media.
The bulk of the settlement – $13.5 million – will fund state and local investigations into privacy-rights and intellectual- property violations, Lock yer said in a statement as the lawsuit and settlement were filed in Santa Clara County Superior Court.
The lawsuit marks the first civil case brought by authorities against Palo Alto-based HP for the scandal that erupted in September and led to criminal charges against former chairwoman Patricia Dunn and four others.
“Fortunately, Hewlett-Packard is not Enron,” Lockyer said. “I commend the firm for cooperating instead of stonewalling, for taking instead of shirking responsibility, and for working with my office to expeditiously craft a creative resolution.”
The remainder consists of $650,000 in civil penalties and $350,000 to cover the state’s investigation and other costs.
HP has also agreed to various governance reforms, which Lockyer said will help protect privacy rights during any future HP investigations. News of the settlement was reported Wed nesday by CNet Networks Inc.’s News.com.
Prosecutors said the company hired outside detectives who tricked phone companies into disclosing the private phone records of directors, journalists and others so the company could track the source of news leaks.
Bryan Wagner of Littleton was an investigator indicted in the probe on charges of identity theft and fraud. He and two other investigators – Ronald DeLia and Matthew DePante – pleaded not guilty to the charges in Santa Clara County Superior Court in October.
Wagner’s lawyer, Stephen Naratil, said Thursday that the civil settlement has no bearing on his client’s case. Naratil said he’s set to return to court Jan. 17 to set a date for a preliminary hearing.
HP shares fell 28 cents to close at $39.86 Thursday on the New York Stock Exchange.
Denver Post staff writer Kimberly S. Johnson contributed to this report.
