Former HP Chair Tells Congress She Was Told 'Methods Legal'

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Former Hewlett-Packard Chairwoman Patricia Dunn told a U.S. Congress subcommittee today that she was assured that methods used by investigators to find the source of leaks from the company's board of directors were legal.

Dunn also told lawmakers she believed any investigative techniques used during the 2006 portion of the investigation had to be approved by HP President and Chief Executive Officer Mark Hurd.

Dunn trusted HP employees and lawyers who told her the investigation complied with HP's high standards of conduct, she told the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee. HP has disclosed that the year-old investigation included pretexting, in which investigators pretended to be account holders to gain the personal records of reporters, HP board members and employees.

When questions about the investigative techniques surfaced recently, Dunn passed concerns about the investigation's techniques to Hurd, she said. Before then, HP's internal lawyers assured her the investigative techniques were being done "legally and properly," she said.

"I deeply regret that so many people, including myself, were let down" by trusted HP advisors, she said.

More Details From Dunn

Dunn, who was forced to resign Sept. 21, told lawmakers she authorized the investigation but did not oversee its operation. That task fell to the HP legal team, and two of its members declined to testify. "At no time in the investigation did I authorize its methods," Dunn said. "I asked this to be done in the HP standard way."

But lawmakers pointed to three documents, including the handwritten notes of former HP general counsel Ann Baskins, saying Dunn was told of pretexting methods as early as June 2005. Dunn said she was unaware that investigators were misrepresenting themselves in order to get personal records until July of this year.

Dunn said she doesn't remember the June 2005 conversation referenced in Baskins' note. "I had no reason to think anything illegal was going on," she said. "I had batteries of experts telling me that wasn't the case."

With HP officials telling her the investigation methods were legal, Dunn said she had no ethical concerns, she said. "I believed these [investigations] may be in fact quite common, not just at Hewlett-Packard, but at companies across the country," she said.

Fifth Amendment Invoked

Earlier, Baskins, who resigned her position earlier in the day, formally declined to answer any questions by invoking her Fifth Amendment right to avoid self-incrimination.

HP today filed a form with the U.S. Securities and Exchange Commission (SEC) saying it would provide Baskins with a compensation package, including the option to sell her outstanding stock options, worth nearly $3.7 million, by Nov. 22. Baskins will also have access to the vested portion of her retirement account at HP and to other benefits. If she accepts the package, she will give up any claims against HP and its employees, according to the SEC document.

Subsequent witnesses including outside investigator Ronald DeLia, of the investigation firm Security Outsourcing Solutions, were also refused to testify based on their Fifth Amendment rights.

HP's use of detectives who obtained people's telephone records under false pretenses while investigating press leaks from its board will be in the spotlight. The matter caught the attention of the Oversight and Investigations subcommittee of the U.S. House Committee on Energy and Commerce, some of whose members have been actively promoting legislation that would explicitly criminalize tactics such as those used in the HP investigation.

Pretexting Tantamount to Fraud?

The actions taken by HP were "not the act of one rogue employee," said Representative Jay Inslee (D-Washington), indicating that at least some of the politicians might not accept the characterization of the events at HP that its chief is set to offer before the subcommittee. In a written version of his testimony made available earlier, President and Chief Executive Officer Mark Hurd called the scandal the result of a "rogue investigation."

Inslee and Representative Marsha Blackburn (R-Tennessee) have co-authored legislation that would prohibit the obtaining of customer information from telecommunications carriers by false pretenses, and the sale or disclosure of such records obtained by false pretenses.

In her opening remarks Blackburn called pretexting a purposeful effort to deceive and defraud in order to get information one is not entitled to have. "How prevalent is it in the corporate boardroom?" she asked.

Criminalization of pretexting needs to extend to all forms of telecommunications, said Representative Tammy Baldwin (D-Wisconsin), adding that legislation must address records ranging from conventional telecom through mobile and Internet telephony. She called for a "comprehensive legislative approach" to cover all sectors where pretexting could occur.

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