HP Hewlett Packard's Corporate Governance Woes Part 3

HP: Hewlett Packard's Corporate Governance Woes - 3

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Page Three of Six Pages

3. Hewlett Packard Corporate Governance Problems - Pretexting and Other Orwellian Monitoring Tactics

» Pretexting
» The Blame Game Starts
» Orwellian Monitoring Tactics

Pretexting

[The Telephone Records and Privacy Protection Act of 2006 became Public Law No: 109-476 in the US on January 12, 2007, and makes pretexting - the obtaining of phone records under false pretences - a federal crime.]

The subcontractors of a firm of private investigators employed by HP to conduct their investigation, used 'pretexting' - a controversial method of obtaining phone records and personal information under false pretences. Offers for pretexting services are rampant on the web. Since companies rarely ask for passwords, HP's investigators managed to obtain detailed call logs from phone companies by posing as directors and journalists. AT&T informed Thomas Perkins, an HP director, that a third party convinced an AT&T customer-service representative to send Perkin's phone records to an email account at Yahoo by providing the last four digits of Perkin's social security number.

Kevin Martin, chairman of the Federal Communications Commission, said that after the Senate hearing, that the FCC has sent AT&T a letter asking for details about the HP case. However, he said, "making it illegal to sell (phone record information) would be helpful." The Gramm-Leach-Billey Act of 1999 makes it illegal to obtain financial records under false pretences but the legal implications of obtaining phone records through pretexting is unclear.

CNET reports that on September 29, 2006, "Cingular Wireless filed a lawsuit against CAS Agency of Carrollton, Ga., and Charles Kelly, the company's registered agent. Cingular contends that CAS illegally obtained the telephone records of Dawn Kawamoto, a reporter for CNET News.com, as part of the HP operation."

Larry Babbio, HP Director & Verizon President On the other side of the coin, Verizon, whose president Larry Babbio (seen on the right) is an HP director, has has filed action against pretexters.

U.S. House Energy and Commerce Committee member and Democratic representative from Michigan, John Dingell said, "We have before us witnesses from Hewlett-Packard to discuss a plumbers' operation that would make Richard Nixon blush were he still alive." He asked, "Why weren't you paying attention at briefings and why didn't you read the reports that raised red flags?... Where was board leadership and responsibility?"

"If I called you up, would you give me your phone records?" asked chairperson of the House committee, Representative Joe Barton. Dunn replied "I would."

CNET News, an online technology news-site and one of the media outlets where the leaks appeared, reports that "the investigation to find the source of media leaks involved possibly illegal access to phone records of the company's directors, at least nine journalists and potentially many other people. As a result, federal and California state prosecutors launched investigations, and civil lawsuits and criminal charges are possible."

The Blame Game Starts

Both HP chairperson Patricia Dunn and CEO Mark Hurd have testified before the U.S. House Energy and Commerce Committee's Subcommittee on Investigations, that they did not know or approve of any illegal methods used in trying to determine the source of the leaks - an investigation initiated by Dunn when she asked Hurd to provide corporate resources and personnel to conduct the investigation. Instead, Dunn and Hurd point the finger for any wrong doing at the investigative team.

The team was directed by senior counsel and chief ethics officer, Kevin Hunsaker (who resigned on September 26, 2006.) The second member of the team was general counsel Ann Baskins, and the third member was Anthony Gentilucci, who managed HP's global investigations unit. All three left HP's employment in September and have invoked the US Constitution's fifth amendment during the September 29 House committee hearings. The fifth amendment allows a person to decline giving testimony that might incriminate them. A fourth member of the team was Ronald DeLia, an outside investigator.

Dunn testified that Hunsaker had assured her that all the investigative methods used were legal. She said, "I deeply regret that so many people including me were badly let down by this reliance. I would like you to know that I was a full subject of this investigation, and I too, was pretexted."

Hunsaker had written (in a footnote to a report he wrote for HP's legal team and Dunn), "It should be noted that, with respect to non-HP phone records, the Investigation Team utilized a lawful investigative methodology commonly utilized by entities such as law firms and licensed security firms in the United States to obtain such records."

Hunsaker's attorney Michael Pancer, said that Hunsaker had been "unfairly portrayed." Hunsaker became involved in the investigation after the the first investigation had been concluded and monitoring practices were already in place (the investigation was conducted in two phases called Kona 1 and Kona 2). Pancer points the finger back at Dunn. "Pattie Dunn was the one who was in charge." Pancer, added that Hunsaker was promoted to director of ethics as a reward for a successful investigation. (Hunsaker and Pancer as quoted by Ellen Lee, San Francisco Chronicle Staff Writer.)

On his part, CEO Mark Hurd states that while in February 2006, he approved the contents on an email to a reporter containing false information in order to identify the source of the leaks, he did not see or approve the use of tracer technology (referring perhaps to the emails HP's investigative team sent embedded with software that could inform the investigators where the messages were eventually forwarded). He states that he wished he had asked more questions and wished he had caught signs. Further in March 2006, he was provided with a verbal and written report of the investigation. He did not read the written report. "I could have, I should have." Hurd accepted responsibility for the company but not of the investigation or the methods used.

Fred Adler, HP's computer security investigator, testified that he was "deeply troubled and concerned" about the methods used to obtain phone records. He testified that he and another investigator, Vince Nye, had conveyed their concerns to their managers about accessing personal call logs and their questionable legality. Nye had sent an email to Kevin Hunsaker, HP's ethics officer, warning that the techniques used in the probe were unethical and could damage HP's reputation.

Dunn denied knowledge of these concerns expressed within HP and said she was unaware of the use of 'pretexting' until the practice was questioned by in member of the board in June 2006.

Orwellian Monitoring Tactics

While Adler may have had misgivings about pretexting, he had no misgivings about installing spy software on an HP employee's computer. In February 2006, Fred Adler informed HP's investigative team via a memo that "New monitoring system that captures AOL Instant Messaging is now up and running and deployed on Moeller's computer... . It instantly began to pay results." He was referring to Michael Moeller of HP's media relations team and the decision to monitor Moeller. Then, in March 2, 2006 Kevin Hunsaker asked Fred Adler to monitor calls between Moeller and Pui-Wing Tam, a reporter at The Wall Street Journal. "Do some monitoring on incoming and outgoing calls to Pui-Wing Tam and keep a really close eye on her IM traffic with Moeller." In September, Dunn and Hurd both apologized to Moeller about the monitoring (that did not reveal any leaks or justification for the monitoring).

Brigida Bergkamp was another member of HP's media relation group who was monitored. There is no word if she was directly offered an apology. (according to Ellen Lee, San Francisco Chronicle Staff Writer) Dawn Kawamoto, CNET Reporter

Earlier we had mentioned Hurd's acknowledgement of the use of tracer technology, referring perhaps to the emails HP's investigative team sent embedded with software that could list and inform the investigators where the messages were eventually forwarded, and the attempt to install monitoring software on CNET reporter Dawn Kawamoto's computer. HP had two former FBI agents wait outside Keyworth's house and watch him on the day the e-mail was sent to Kawamoto.

The investigative team appears to have used every conceivable monitoring tactic. They trailed a board director's wife to a bingo parlor, rummaged through garbage, covertly photographed of board members and family members, had plans to plant spies in newsrooms, and mapped personal and family connections. They found out that the father of a CNET reporter had worked with Dr. Keyworth, an HP board member and one the investigation teams principle suspects. The investigators looked for language use patterns. They matched Keyworth's habitual use of the phrase "I plan to recommend" at board meetings with quotes in the Kawamoto article at CNET.

And of course they obtained call logs. In January 2006, Hunsaker asks in a memo to his investigative team: "Do we have the outbound calls from Keyworth's home for that date? So we can confirm that he and/or his wife made calls from their house that day. Any other way anyone can think of that we can verify that Keyworth was at home that day?... I'm starting to get excited." (according to Ellen Lee, San Francisco Chronicle Staff Writer)

It is surprising, that given that given the application of an almost unlimited amount of resources and every conceivable investigative tactic short of drugging and torturing suspects, the investigation found the source of only one of the leaks - the leak to CNET in January 2006, which by all accounts hardly merited the Orwellian measures employed. In HP's news release on September 12, 2006, Hurd says, "At HP's request, Dr. Keyworth often had contacts with the press to explain HP's interests. The board does not believe that Dr. Keyworth's contact with CNET in January 2006 was vetted through appropriate channels, but also recognizes that his discussion with the CNET reporter was undertaken in an attempt to further HP's interests. HP board chairman Patricia Dunn expressed regret for the intrusion into his privacy."

The source of the January 24, 2005 leak to the Wall Street Journal, the leak that in Dunn's words brought matters to a head, remains unreported.

While the monitoring was in progress, HP's board began to disintegrate.