The HP Saga: Focus on Hurd, Hunsaker on Ethics

21 Sep ’06

The WSJ shifts its attention in the HP saga to CEO Mark Hurd today, with a story titled “H-P CEO Hurd Might Have Had Bigger Probe Role” (the NYT has the same story). Curiously, the story reports that bigger role as having been periodically informed of the investigation, and having an opinion as to whom the leaker might be. Not news, I would have thought. The smokiest this gun gets is this passage:

As the CNET leak investigation geared up, H-P’s investigators wanted to meet with Mr. Hurd to go over the probe. Mr. Hunsaker discouraged them, writing that the CEO had already said “who he thinks is behind” the leak, and why he believes they did it.

But Mr. Gentilucci persisted with the idea, implying in a Jan. 26 email that Mr. Hurd was already conversant with some of the leak investigators from their 2005 efforts.

A Hurd meeting was necessary, Mr. Gentilucci wrote, “if for nothing else to let him know we have a full court press on this, advise him of what we are doing, introduce the new faces for a future brief, and maybe get a dump from him if he feels like sharing his thoughts.”

It is unclear whether Mr. Hurd met the investigators during this year’s leak probe. An executive close to the H-P CEO says that before the January CNET article, Mr. Hurd didn’t believe news leaks were a major problem for the company.

Hardly in flagrante delicto. Yet. But I’m sure it comes as great news to the HP team that the NYT, WSJ and WaPo are now all over this story, every single day.

WaPo has additional detail, and seems to get closer to Hurd, though it’s just a flesh wound:

Hewlett-Packard Co. chief executive Mark V. Hurd approved an elaborate “sting” operation on a reporter in February in an attempt to plug leaks to the media, according to an e-mail message sent by HP Chairman Patricia C. Dunn.

None of the e-mails reviewed by The Post were to or from Hurd, nor do they detail what information Hurd had when he approved the sting operation.

It was unclear whether the e-mail sting operation involved illegal tactics, experts said, but federal and state authorities have launched probes into the legality of HP’s methods.

But are we getting close to ‘affecting the stock price’ territory yet? I’m wondering whether these disclosures will earn Hurd an invitation to the the House Energy and Commerce investigative subcommittee hearings. In other Hurd news, he will apparently be making a statement on Friday.

Also interesting is some additional insight into HP’s investigative tactics, which would not be out of place in a John LeCarre novel (from the WaPo piece):

As the project evolved, Hunsaker and Anthony Gentilucci, an HP global investigations manager in Boston, began to refine Jacob’s character. “I think we have to figure out who Jacob is, weak, strong, vindictive, a Bill and Dave fan, possibly lower level employee . . . will dictate the tone of the e-mail,” Gentilucci wrote on Jan. 28.

Over the next week, HP investigators designed a plan to give Kawamoto a “[small] accurate piece of advance information” about a new handheld product, before they would “spring the false one,” referring to a fabricated news tip about HP opening a computer data farm. That first tip, about the handheld device, would be sent in an e-mail that would include the tracking software.

More interesting perhaps are the numerous suggestions in the article that HP attempted to use HP ethics officer Kevin Hunsaker’s (today’s Technorati count=33) position as an attorney to blanket the company’s investigations in attorney-client privilege, in the event of a later outside investigation (from the NYT piece):

One e-mail exchange, from the company’s chief ethics officer to a lead investigator, also underscored that those overseeing the operation were worried that their efforts could invite legal scrutiny.

In that exchange, Kevin T. Hunsaker, a lawyer serving as chief ethics officer, wrote to Jim Fairbaugh, the chief of global security, that for the sake of confidentiality, he had been asked to take over the investigation by Hewlett-Packard’s general counsel, Ann O. Baskins.

“Ann Baskins has asked me to oversee the investigation into this in order to protect the attorney-client privilege in the event there is litigation or a government inquiry of some sort,” Mr. Hunsaker wrote in a Jan. 23 e-mail message titled “Potential Information Leak — Privileged Communication.”

Recap: at a time when the company now says it did not believe that its actions were illegal, but when the company should have known, at the very least, that its actions quite possibly were, or that it was retaining others to commit acts that quite possibly were illegal, an ethics officer was appointed to lead an investigation, because he was an attorney, and could shelter that investigation from public or regulatory view. Got that?

I’d be interested to hear from others who have experience, on the U.S or Canadian side, with privilege in this context, but I have to think that if this case comes to blows there will be a vigorous contest over whether privilege is properly claimed. Or perhaps, HP being such a leaky boat still, it just won’t matter.

One other interesting point – is a claim of privilege tainted by the attorney’s active involvement in the underlying activities in some capacity other than attorney? Hunsaker’s fingerprints seem to be all over the effort to sting CNet’s Kawamoto:

On Feb. 22, Hunsaker e-mailed Dunn and Baskins with a copy of a slide showing the bogus handheld product to be launched. “I made up everything in the slide, trying to make it at least somewhat feasible,” Hunsaker wrote to Dunn and Baskins. “I won’t quit my day job, but hopefully neither will the name nor the information on the slide are terribly off-base.”

Dunn replied: “Kevin, I think this is very clever. As a matter of course anything that is going to potentially be seen outside HP should have Mark’s approval as well.”

On Feb. 23, Hunsaker sent an e-mail to Dunn. “FYI, I spoke to Mark a few minutes ago and he is fine with both the concept and the content.”

Last note – Patricia Dunn received her “Hall of Fame” leadership award – not for leading the HP keystone cop investigation, but other things, I hope. CNet reports that she received a standing ovation, though I can’t help but wonder whether it was of the “Thank God We’re Not You, Now Please Don’t Embarrass Us Tonight” variety, and that she said:

All I will say about the maelstrom is that I look forward eagerly, in the near future, to the time when I can set the record straight and go back to leading my life as discreetly as possible,” Dunn said during her after-dinner speech.

She is not reported to have also said “though that time, as this investigation deepens on a daily basis and continues to reveal more about what I directed, knew or should have known about possibly illegal and certainly improper activities that HP actively attempted to conceal to avoid just this extraordinary damage to the company, is rapidly receding into the distant future, from which it may well never return.”

Update: PC World reports on the House Committee’s growing witness list:

The investigative unit of the U.S. House Energy and Commerce Committee announced today that it has asked HP Senior Counsel Kevin Hunsaker and Fred Adler, a company computer security investigator, to join a growing list of witnesses.

The subcommittee had also previously requested testimony from outgoing HP Chairman Patricia Dunn, HP General Counsel Ann Baskins, HP Global Security Manager Anthony Gentilucci, outside attorney Larry Sonsini as well as outside investigators.

{ 2 comments… read them below or add one }

rob September 21, 2006 at 09:23

The WSJ and Washington Post are shocked someone in business wants to know who’s leaking secrets that could cost the company and its thousands of shareholders millions if not billions of dollars?! Oh the poor media…. who will protect them from these evil corporate goons when all they want is some illicit information…. poor poor innocent media….


lindsay September 21, 2006 at 08:34

The behaviour of these so-called executives is absolutely unethical, but worse, extraordinarily immature, descending to the level of grade school intrigue. Not worthy of those claiming to be capable of running a huge public company. From the emails published recently the inept goings on (you can tell these clods were all pumped up and high fiving wildly over their little covert op) would _embarass_ the Keystone Kops. This mean spirited, juvenile thrill seeking is the most worrying feature of the piece.

Going after the media gives them an excuse and plenty of motivation to take a piece of you back. It’s a PR war that can’t be won by HP now. On the most practical, shareholder value level, the result of this foolishness is months (years?) of adverse press coverage for HP without any means to counteract it. Articles on new HP products will have a tag at the end of them saying HP is embroiled in scandal over its hamfisted attempts to sting a reporter.

If I was a shareholder, I’d be making noise to get anyone who touched this scheme sacked. It is disgusting.


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