HP's Patricia Dunn to step down in January
- HP's Patricia Dunn to step down in January
George Keyworth, who was singled out in press leak probe, also quits
Dunn done as HP chairman
Sept. 12: Chairman Patricia Dunn will step down in January because of
the corporate spying scandal. "On the Money's" Dylan Ratigan conducts
a roundtable discussion on the moves.
Ms. Dunn should be fired immediately. Then, she and the rest of her
board should be tried for crimes against the employees of HP. I am
willing to bet that HP has in their mission statement something about
being ethical. LOL. Oh, and just so you folks at HP know, I am now
adding you to my official boycott list.
SAN JOSE, Calif. - Hewlett-Packard Co. said Tuesday that Patricia
Dunn will step down as chairwoman of the computer and printer maker
in January amid a widening scandal involving a possibly illegal probe
into media leaks. She will be succeeded by CEO Mark Hurd.
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.
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.
Also Tuesday, George Keyworth II, the HP director singled out for
leaking information to the press, resigned from the company's board
The pressure on Dunn to step down began rising sharply Monday when
Congress and federal investigators entered the fray surrounding HP's
possibly illegal probe of media leaks. The FBI, the U.S. Attorney for
Northern California and the House Energy and Commerce Committee all
joined the California attorney general and Securities and Exchange
Commission in probing the scandal swirling around HP's Board of
California Attorney General Bill Lockyer said his office has enough
evidence to obtain indictments of people within Hewlett-Packard Co.
and of hired contractors, after the company disclosed questionable
tactics in a boardroom leak investigation.
"We currently have sufficient evidence to indict people both within
HP as well as contractors on the outside," Lockyer said in an
interview aired Tuesday on the Public Broadcasting Service's NewsHour
with Jim Lehrer.
"Crimes have been committed," Lockyer said. "People's identities
being taken falsely is a crime. People gaining access to computer
records that have personal information, in California, that's a
Dunn, a former freelance journalist, was angry about the media leaks
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 board members.
Although frequently used by private investigators, the tactic tests
the bounds of state and federal law.
HP's board met for a second time Monday night to discuss whether Dunn
should remain chairwoman of the Silicon Valley giant.
Richard Hackborn, who has served on the board since 1992, will become
lead independent director in January.
Dunn's entanglement in the pretexting scandal marks a rare stumble
for one of the most powerful women in corporate America.
Dunn, then CEO of Barclays Global Investors, joined HP's board in
1998 and became chairwoman in 2005, taking an active role in running
the 11th largest company on the Fortune 500.
She oversaw the ouster of former HP CEO and Chairwoman Carleton
Fiorina in February 2005, and two months later introduced Hurd as
Hurd wasn't well known on Wall Street or in the financial media
before taking the reins of HP. But he enjoyed a solid a reputation
among business experts as a no-nonsense cost cutter familiar with
nearly every facet of management. HP shares surged 10 percent the day
his appointment was announced.
He was previously chief executive at Dayton, Ohio-based NCR Corp., a
computer services company best known for its ATM machines.
At HP he orchestrated a cost-cutting campaign that, when it winds
down later this quarter, will have resulted in as many as 15,000
layoffs. But morale had been noticeably higher under Hurd than
Fiorina until details of the company's leak investigation were
disclosed last week.
Although it marks a dark chapter in the company's history, HP could
benefit from having Hurd consolidate his power, said Roger Kay,
president of the market research firm Endpoint Technologies
"It makes perfect sense to give (Hurd) the chairmanship," he
said. "He has the character, personality and chops to do it. I can't
think of anyone else you would want to run the company at this point."
The leak investigation at HP began with a January article on CNET
Network Inc.'s News.com that included a quotation from an anonymous
HP source who described a gathering of HP directors at a posh spa in
At a board meeting in May, Dunn identified director George Keyworth
II as CNET's source, as well as the source of other leaks dating to
early 2005. The board asked Keyworth, 66, to resign, but he refused.
HP then barred him from seeking re-election.
His ouster riled another board member, longtime Silicon Valley
venture capitalist Tom Perkins, 74, who resigned and stormed out of
the May 18 meeting.
Perkins' attorney later discovered that private investigators had
obtained the last four digits of his client's social security number.
They used that information to open an online account with AT&T, then
called the telephone company and impersonated Perkins, asking for a
record of phone calls to and from his house.
HP's investigators also obtained the phone records of several
journalists, including those who work at The Wall Street Journal,
BusinessWeek, The New York Times and News.com.
Keyworth, who has acknowledged talking to the media, was the former
science adviser to President Reagan and director of the Physics
Division at Los Alamos National Laboratory.
On Tuesday, Dunn defended the need for the investigation.
"These leaks had the potential to affect not only the stock price of
HP but also that of other publicly traded companies," she said.
California's attorney general has already said HP's probe broke two
California laws governing identity theft illegal access to computer
records. It's still unclear, however, whether the company or anyone
acting on its behalf will face civil or criminal charges.
FBI Deputy Director John Pistole said in an interview Monday with The
Associated Press that the bureau opened its probe Monday and was
investigating two possible crimes: illegal computer intrusion and
"When allegations of a federal crime are brought to the FBI's
attention we have to make a determination whether we'll initiate an
investigation," Pistole said. "Obviously if the U.S. Attorney has
reviewed information and believes there is something for the FBI to
investigate, we'll work closely (together)."
He did not give a timetable for when the inquiry would be completed.
The U.S. Attorney's Office issued a statement saying it
was "investigating the processes employed in an investigation into
possible sources of leaks."
The Congressional committee gave HP a week to name the private firm
it hired to investigate the leaks and to turn over all "records and
information related to the company's reported effort to obtain
private phone records." The request was made as part of the panel's
ongoing investigation into pretexting.
The federal investigation further complicates the situation for HP,
"It opens the company to more scrutiny on a broader and more powerful
level," said Ken Sukhia, a former U.S. Attorney in Tallahassee, Fla.
Still, investors have largely ignored the scandal. HP shares were
trading this week near the top end of its 52-week range of $25.53 to
"It's certainly embarrassing," said Martin Reynolds, vice president
of the research firm Gartner Inc. "And it's obviously not the best
press, but the good news is this is pretty much divorced from the day-
to-day operations of HP."