Thursday, September 07, 2006

HP makes good copy

Today's news about the Hewlett-Packard spying story is just so juicy, I can hardly contain myself! Seriously, I thought it took generations of inbreeding to produce this level of stupidity, but apparently HP chairwoman Patricia C. Dunn and both her internal counsel and external lawyers at Wilson Sonsini Goodrich & Rosati all come from families whose trees lack branches. (Speaking of Wilson Sonsini, where have I heard that law firm's name before? Oh, here it is! They do seem to have had a busy year, haven't they?)

The Wall Street Journal ("H-P Faces Probe Over Its Inquiry Into Board Leaks"), New York Times ("H.P. Spied on Writers in Leaks") and Financial Times ("HP’s investigators obtain reporters’ records", "Lex: Hewlett-Packard", and "HP probe puts chairman under scrutiny") have all carried stories about how Hewlett-Packard's private investigator used "pretexting" to gain access to the telephone and cellphone records of certain HP directors and several journalists. HP claims that its lawyers assured them that what its private investigators were doing was perfectly legal, but they didn't know the PIs were engaging in pretexting. I guess when the phone records were presented to Dunn (and her lawyers) in the PI's report--the report Dunn presented to HP directors George A. Keyworth II and Thomas J. Perkins when demanding they resign--she must have assumed the records had just fallen from the sky or something.

And now it comes out that HP, one way or the other, was obtaining phone records from at least 9 reporters as well! None of this, of course, was important enough to merit including in any SEC filings because, well, I guess Mr. Perkins didn't really have a "disagreement" with the board when he resigned, so to speak, and a possible criminal investigation of the company isn't something investors really want to know about when making an investment decision. (The quote from H-P's SEC filing on August 31 states that Wilson Sonsini advised HP that "the use of pretexting at the time of the investigation was not generally unlawful (except with respect to financial institutions)..." And people wonder why lawyers are paid so much! It takes skill to say something like that with a straight face.)

But the best part, of course, is that Perkins, after growing his cajones, hires former Assistant U.S. Attorney General Viet H. Dinh to represent him and "engage in a 3 1/2-month effort just simply to get HP to come clean and disclose to the market and SEC Tom Perkins' reason for resigning, and the full scope and methods of the chairperson's investigation." Mr. Dihn, in case you aren't a DC policy wonk, is widely credited as the author of the USA Patriot Act. (You know, that law that massively increased the U.S. government's ability to spy on people?) As Nelson Muntz once said, "I hope the irony's not lost on ya, Simpson."

However, it also appears that boardmember George Keyworth (he of the juevos grandes) likely won't be a boardmember much longer. Even though, as he said when he told Dunn to f-off, he works for HP's shareholders, not her, the board still determines who gets nominated for a board position and he isn't being renominated. Regardless of what HP shareholders think about any leaks he may have made to the press about HP strategy after the ousting of former HP CEO Carly Fiorina (such as this one at CNET), it doesn't look like they'll have the opportunity to vote on it.

(And in response to MMW in San Antonio's question about whether HP had a right to get the records if HP were paying the directors' cellphone bills, my guess is if they had to use pretexting to do it, probably not.)

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