Intrigue in High Places

[IDemo]

To catch a leaker, Hewlett-Packard's chairwoman spied on the home phone records of its board of directors

By David A. Kaplan
Newsweek
Updated: 6:36 p.m. ET Sept. 5, 2006

The confrontation at Hewlett-Packard started innocently enough. Last January, the online technology site CNET published an article about the long-term strategy at HP, the company ranked No. 11 in the Fortune 500. While the piece was upbeat, it quoted an anonymous HP source and contained information that only could have come from a director. HP’s chairwoman, Patricia Dunn, told another director she wanted to know who it was; she was fed up with ongoing leaks to the media going back to CEO Carly Fiorina’s tumultuous tenure that ended in early 2005. According to an internal HP e-mail, Dunn then took the extraordinary step of authorizing a team of independent electronic-security experts to spy on the January 2006 communications of the other 10 directors-not the records of calls (or e-mails) from HP itself, but the records of phone calls made from personal accounts. That meant calls from the directors’ home and their private cell phones.

It was classic data-mining: Dunn’s consultants weren’t actually listening in on the calls-all they had to do was look for a pattern of contacts. Dunn acted without informing the rest of the board. Her actions were now about to unleash a round of boardroom fury at one of America’s largest companies and a Silicon Valley icon. That corporate turmoil is now coming to light in documents obtained by NEWSWEEK that the Securities and Exchange Commission is currently deciding whether to make public. Dunn could not be reached for comment. An HP spokesman declined repeated requests for comment.

On May 18, at HP headquarters in Palo Alto, Calif., Dunn sprung her bombshell on the board: she had found the leaker. According to Tom Perkins, an HP director who was present, Dunn laid out the surveillance scheme and pointed out the offending director, who acknowledged being the CNET leaker. That director, whose identity has not yet been publicly disclosed, apologized. But the director then said to fellow directors, “I would have told you all about this. Why didn’t you just ask?” That director was then asked to leave the boardroom, and did so, according to Perkins.

Close to 90 minutes of heated debate followed, but Perkins, the Silicon Valley venture capitalist, says he was the only director who rose to take Dunn on directly. Perkins says he was enraged at the surveillance, which he called illegal, unethical and a misplaced corporate priority on Dunn’s part. In an interview with NEWSWEEK, Perkins says he was particularly annoyed since he chaired the HP board’s Nominating and Governance Committee and had not been informed by Dunn of the surveillance, even though, he says, she had told him for months that she was attempting to discover the source of the leak.

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[Demeter]

1. Sounds Like A Viable GOP Candidate to Me

Head, shoulders and ankles above our Incompetent in Chief!

[orpupilofnature57]

2. Poppy say's, the son I never had!

[Demeter]

3. She's a Female, Pal.

[orpupilofnature57]

5. I Know, git it?

[IDemo]

4. Maybe HP needs to get into voting machines....