Conflict and Controversy at HP

1. A public relations and potential legal nightmare for the Hewlett-Packard company (HP) began in September 2006. The controversy involved the tactics used by private investigators hired by HP to determine the source of a leak on its board of directors. An interpersonal conflict between two board of director members, Patricia Dunn and Tom Perkins, resulted in the investigators’ unethical actions becoming public knowledge. Conflict and Controversy at HP

2. In January 2005, The Wall Street Journal published an account that summarized content from a board of directors meeting where confidential concerns about CEO Carly Fiorina’s performance were discussed. In January 2006, confidential details of an HP board meeting were published in a article on CNET News. Outside investigators were hired to investigate these leaks and used pretexting to obtain phone records. Loose Lips Sink Ships

3. Pretexting is when a person claims to be another person and asks for copies of their phone records from telecommunications providers. The pretexter usually only needs the last four digits of the person’s Social Security number to fraudulently obtain the records. The private investigators hired by HP obtained the phone records for the board of director members as well as those for nine journalists. Pretexting

4. On May 18, 2006, chairwoman Dunn identified George Keyworth as the leak at a board of directors meeting. Keyworth was asked to resign. He admitted providing the information for the CNET article but refused to resign. Perkins quit in protest of the board’s actions. HP acknowledged Perkin’s resignation in the media, but did not provide notice to the SEC that his resignation was a form of protest over the electronic surveillance. Perkins then took actions designed to force HP to publicly acknowledge the reasons for his resignation. On September 6, 2006 HP disclosed that "pretexting" was used during an investigation into company leaks. The Leak is Revealed

5. The interpersonal conflict between Dunn and Perkins contributed to Perkins’ decision to resign and his decision to force HP to go public about the issue. Perkins and Dunn had very different approaches to their board duties. Perkins preferred to think in “broad strategic stokes” and leave the details to others. Dunn focused on all the details and thought the core of her job was to “dot the I’s and cross the T’s.” In addition, Perkins, as an incredibly successful and wealthy venture capitalist, was used to being “king of the hill” and felt betrayed by Dunn. Perkins versus Dunn

6. Dunn resigned both her role as chairman of the board and then subsequently her board membership. CEO Mark Hurd and Dunn were required to testify at congressional hearings. Criminal charges were filed against Dunn and four others. The Update