HP scandal fallout may be Dunn

Amy Scott Sep 8, 2006

KAI RYSSDAL: Patricia Dunn is the chairman of the board at Hewlett Packard. She got the job early last year… after Carly Fiorina was fired. Right about the time the board of directors started snooping around into who was leaking confidential information. Dunn said today she’s not going to resign over the growing controversy. Unless the board asks her to…which it could when it meets this weekend. News broke Wednesday that HP’s investigators had used questionable tactics to do their detective work. And Marketplace’s Amy Scott reports they went looking in some interesting places.

AMY SCOTT: Back in January, reporters Tom Krazit and Dawn Kawamoto wrote an article for the news site C-Net. Quoting an anonymous source, they described a private strategy meeting held by Hewlett-Packard’s board of directors. This week the reporters learned that HP had taken extraordinary steps to find out who was leaking. Not only had investigators gotten hold of board members phone records, but the reporters’ as well. Here’s Tom Krazit.

TOM KRAZIT: I do not know how they did it in my case. We are waiting to get that information from my provider. In Dawn’s case, they were able to obtain the record by having her home number, and the last four digits of her husband’s social security number.

Krazit and Kawamoto are among nine reporters who’s phone records were accessed, according to HP. In an interview with the Wall Street Journal, board Chair Patricia Dunn said she’d only learned of the reporters’ involvement Wednesday night and that she’d been appalled. And though Dunn told the Journal she had no plans to step down, governance advocate Charles Elson expects some kind of shake-up.

CHARLES ELSON: Given the uproar, and given the damage that that kind of investigation will do to the ability of the directors to effectively carry out their responsibilities, I think she and the board will need to rethink the leadership structure of that board.

Elson says the scandal is damaging not only for HP, but for post-Enron boardroom reforms. He asks how can directors be effective watchdogs, if they’re being spied upon themselves?

In New York, I’m Amy Scott for Marketplace.

RYSSDAL: One more thing to add to Amy’s story. It wasn’t just CNET reporters who were targeted. As she said, there were nine of them. Including staff at the Wall Street Journal and the New York Times. A Times spokesperson said today legal action’s not out of the question.

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