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Shakeup Continues at HP: Dunn to Step Down as Chairperson
[September 12, 2006]

Shakeup Continues at HP: Dunn to Step Down as Chairperson

TMCnet Associate Editor
 
Usually, summertime is when families traveling down the same road together squabble on the way to various destinations. But, at least when it comes to executives at Hewlett Packard (HP), the in-fighting has extended into the fall.
 
Earlier this year, HP’s chairperson, Patricia Dunn, launched an investigation into leaks to the media that apparently were made by company executives. According to an Associated Press report, Dunn “was angry about the leaks and commissioned outside investigators to identify their source.”

 
The investigation has blown up into what some describe as a scandal (HP is now being investigated by the FBI, the U.S. Attorney for Northern California, the House Energy and Commerce Committee, and the Securities and Exchange Commission) in part because of the techniques the investigators used—including a tactic known as “pretexting”—to obtain home phone call logs and other information.
 
Pretexting—described in a recent article by TMC Group Editor Rich Tehrani as “pretending to be someone else and obtaining personal information about that person under the pretext of being them”—is a technique used by private investigators, but nonetheless stretches the limits of California law, AP said.
 
Legal or not, the investigation’s results were nonetheless ugly.
 
According to the AP report, Dunn identified HP director George Keyworth II as the source of the leaks, and the board then asked him to resign. His refusal to comply resulted in the board barring him from seeking re-election.
 
But the trouble didn’t stop there.
 
In an apparent show of support for Keyworth, Tom Perkins, 74, who had been with the company for almost 50 years, resigned during the May 18, 2006 board meeting.
 
The shakeup continued Tuesday with HP announcing that Dunn will step down from her position as chairperson directly following the company’s January 18, 2007 board meeting. Dunn will remain on the board as a director, and her current position will be filled by HP’s CEO and President Mark Hurd.
 
In a statement, Dunn responded to recent events by saying that the leaks she ordered an investigation for had the potential to affect the stock of HP and other publicly traded companies.
 
“Unfortunately, the investigation, which was conducted with third parties, included certain inappropriate techniques,” Dunn added. “These went beyond what we understood them to be, and I apologize that they were employed.”
 
Hurd added that he is proud of the progress HP has made during the past 18 months, and he looks forward resolving the current issues.
 
“I am taking action to ensure that inappropriate investigative techniques will not be employed again,” he said in a statement. “They have no place in HP.”
 
HP also said in its press release that, starting in January, Richard Hackborn, a board member since 1992, will be designated as lead independent director.
 
Mae Kowalke previously wrote for Cleveland Magazine in Ohio and The Burlington Free Press in Vermont. To see more of her articles, please visit Mae Kowalke’s columnist page.
 

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