HP’s Reputation Permanently Sullied; Dunn’s Head Must Roll

After all that we have learned in the past week about the antics and pervasive distrust on the board of directors at Hewlett-Packard, I cannot believe that the venerable technology company can or will allow Patricia Dunn to remain the non-executive board chairman.

The latest news — with more to come, I’m sure — is that California state Attorney General Bill Lockyer has determined that Hewlett-Packard’s clandestine investigation of its own board members violated the law. At this point, though, Lockyer doesn’t know whether charges will be filed or who might be prosecuted.

The Wall Street Journal, among others, has done a stellar job following this story. Its latest report this morning focused on how the scandal is casting an unflattering light on the actions of its outside counsel, prominent Silicon Valley lawyer Larry Sonsini, and board chairman Dunn. The Wall Street Journal also examined how journalists’ phone records, and not just those of HP board members, were targeted and obtained by HP’s investigative contractors looking into the source of a series of leaks regarding the putatively confidential deliberations of HP’s board. 

The Wall Street Journal also points out that private investigators often take the fall when inquiries get twisted, as seems to have happened in this case. You can see Patrician Dunn and HP counsel already pointing fingers at the contractors and subcontractors that indelicately carried out the wrongheaded probe on their behalf.

Dunn’s board leadership really must be called to account here. It’s alarming that HP, at least so far, has not taken to heart the message that it is unacceptable to use surreptitious, police-state tactics to keep its board in line or to ensure that journalists only write what they want them to write. (And, at the end of the today, rigid control — of the board, of news coverage — is precisely what this was all about.)

Dunn is a senior standard bearer of Hewlett-Packard. To have her authorizing and commissioning covert investigations into her own board members, okaying (if only implicitly) privacy violations and ethically questionable and legally sketchy intelligence-gathering tactics, well, it’s appalling. HP should have higher standards. At one time it did have higher standards. As this unseemly scandal plays itself out publicly, the company’s founders must be spinning in their graves.

No, Dunn does not run the day-to-day business at the company. Mark Hurd and his executive team have a bigger impact on the strategies, tactics, operations, and field execution that will determine HP’s success in the marketplace.

Still, HP’s board chairman approved a covert investigation into the personal communications of other board directors. That investigation involved legally dubious tactics, including "pretexting" — impersonating and misrepresenting another individual to gain access to personal records and information — involving nine business journalists and HP board directors as targets of inquiry.

Some observers say Patricia Dunn’s status as board chairman is now tenuous. Others say she’ll survive to chair another day because she can claim to have been ignorant of the unethical and illegal methods that contracted and subcontracted parties used in their investigation of board leaks to business journalists.

She should not get off the hook so easily, though, and I’ll be profoundly disappointed in HP if it allows her such a facile escape from accepting a higher level of responsibility in this matter.

Let’s step back for a second and look at the bigger picture. In the first place, Dunn should not have begun a cloak-and-dagger investigation into her own board of directors. If there’s so little trust among that group, then she has been an abysmal failure as its chairman and should step down. End of story .The ensuing investigation only exacerbates a pre-existing, extremely serious problem of board leadership and trust. 

Second, she was the one who commissioned the investigation, so she should have taken it upon herself — having gone down that dark and sleazy alley — to ensure that the methods and practices of commissioned investigators were legal and beyond ethical reproach, even though the initiation of such an investigation, in and of itself, was an ethical lapse of epic proportions.

There are some observers who say this matter is irrelevant to HP as a technology company and as an investment vehicle. I disagree vehemently.

HP has been tarnished by this debacle, and somebody there must have the integrity and perspicacity to see it.

Mark Hurd or somebody at a senior level must take a stand. Otherwise, what conclusions will HP employees,  contractors, suppliers, technology partners, channel partners, and customers draw from this scandal? Can HP be trusted? How does one not know that HP will attempt to use subterfuge or illicit investigative practices to get its way in other matters? Will the company start handing out social-insurance numbers of employees to private investigations, as it appears to have done with the social-insurance number of a board member?

This is a serious matter, more serious than some commentators seem to appreciate. Patricia Dunn’s head must roll, and HP must be seen to be contrite and penitent for her actions.

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