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Hewlett-Packard Paid $325,000 to Trace Source of Boar
From: David Farber <dave () farber net>
Date: Tue, 3 Oct 2006 12:00:42 -0400
Begin forwarded message:From: "CONNIE GUGLIELMO, BLOOMBERG/ SAN FRANC" <cguglielmo1 () bloomberg net>
Date: October 3, 2006 11:54:29 AM EDT To: dave () farber net Subject: (BN ) Hewlett-Packard Paid $325,000 to Trace Source of Boar Fyi, the House released yesterday all the documents it received from Hewlett-Packard over the boardroom leak investigation. - connie Hewlett-Packard Paid $325,000 to Trace Source of Board Leaks 2006-10-03 00:04 (New York) By Connie Guglielmo Oct. 3 (Bloomberg) -- Hewlett-Packard Co. paid private investigators more than $325,000 to spy on directors and reporters in a probe that may have used illegal tactics and eventually cost Chairwoman Patricia Dunn her job. Surveillance, including a ``sting'' operation and digging through trash, was the most expensive item, costing $83,600 over five months, according to an invoice from Security Outsourcing Solutions Inc. that was supplied by Hewlett-Packard and released late yesterday by the U.S. House Energy and Commerce Committee. Dunn authorized the probe that led investigators to spy on directors, two employees and nine reporters as they searched for the source of boardroom leaks. At one point, Dunn considered using lie detectors, the documents show. Dunn, General Counsel Ann Baskins, the company's director of ethics, and the global security chief all resigned last month for their part in what Hewlett-Packard Chief Executive Officer Mark Hurd called a ``rogue investigation.'' ``Cost of catching leaks: $325,000. Cost to company's reputation: priceless,'' Paul Saffo, a longtime Silicon Valley researcher and associate professor at Stanford University, said in an interview. ``Everyone has gotten so hung up on the legality of this they've forgotten the ethics.'' Palo Alto, California-based Hewlett-Packard, the world's second-largest personal computer maker, paid more than $51,000 to have personal phone records obtained as part of the probe, according to a May 2 invoice submitted by Ronald DeLia of Security Outsourcing, a Boston-based firm that oversaw a network of investigators working to gather information on the company's behalf. The probe, dubbed Kona II, ran from December 2005 through April, according to DeLia's bill, which totaled $325,641.65. Indictments Hewlett-Packard acknowledged on Sept. 6 that investigators used fake identities to gain access to call records, a tactic called pretexting that may be illegal. California Attorney General Bill Lockyer said he is considering whether to indict Hewlett-Packard executives and outside contractors over the probe. Hurd said he may have recalled hearing in a July 22, 2005, meeting that phone records were being obtained off the Web, according to an interview he had with lawyers for Wilson Sonsini Goodrich & Rosati on Aug. 25 as part of their review of the probe. Hurd said he was not aware that pretexting was being used to obtain phone records, according to a three-page summary of the Hurd interview. The House committee released 700 pages related to the investigation after Dunn, Hurd, outside attorney Larry Sonsini and internal security chief Fred Adler spent about seven hours fielding attacks from lawmakers who chastised the PC maker for its handling of the probe. Representative John Dingell called it a ``case study in deceit, dishonesty, improper behavior'' and an example of ``gross stupidity.'' Lack of Oversight Hurd, who has admitted not giving the probe the oversight it deserved, told committee members last week that Hewlett-Packard terminated its contract with Security Outsourcing after relying on the firm for about eight years to help with investigations. Among the charges from Security Outsourcing was the line item: ``Multiple Surv. And Sting Activity Palo Alto, Piedmont, SF, LA, CA & Denver, CO (Note: includes surveillance & trash re- con of all areas).'' Background checks on board members, their relatives and reporters from media outlets including the Wall Street Journal and Cnet.com cost a further $66,688, according to the bill. DeLia also charged $37,535 to ``locate, review and catalog over 10,000 print and Internet media articles.'' Stolen Laptop Hewlett-Packard paid more than $9,600 for work related to recovering a laptop computer owned by board member George Keyworth, who resigned in September after acknowledging he was the source of some leaks. Keyworth's laptop was stolen while he was on vacation in Italy, and DeLia, in a Feb. 3 e-mail to Hewlett-Packard's internal security team, said he had spoken with local police to ask for help in trying to recover the machine. ``We will also contact the local criminal element and inform then there is a reward, no questions asked, for the return of the laptop,'' DeLia said in his message to Kevin Hunsaker, Hewlett- Packard's director of ethics, and Anthony Gentilucci, then global security chief. Hunsaker and Gentilucci led the Kona II investigation. At the urging of director Tom Perkins, whose complaints about the methods of investigation forced Hewlett-Packard to go public, Dunn considered using lie detectors. She commissioned a report on polygraphs, which concluded it was inappropriate to use such tactics, according to a memo from the company's law firm dated Aug. 21, which cited an interview with Dunn. Didn't Tell Board Perkins then backed off, according to Dunn's statement to the lawyers. Dunn didn't tell the rest of the board that lie detectors had been considered and rejected. Hewlett-Packard declined to comment, said spokesman Mike Moeller, one of two employees investigated and later exonerated as part of the probe. (Costs to conduct background checks on Hewlett-Packard's media relations department were $6,435.) E-mails, presentations and other documents show that Hewlett-Packard investigators followed directors and their families and sent at least one phony e-mail to a reporter with a tracing device designed to determine whether she forwarded the message to her board informant. Investigators also considered sending staff posing as administrative help and cleaning crews to spy on newsrooms, the documents show. The e-mails showed a growing hubris among investigators as the detectives got closer to nailing Keyworth as the leaker. `We're Goin' In' ``Strap on your helmets fellows, we're goin' in!!!'' internal investigator Vince Nye said in a Feb. 9 e-mail to fellow Hewlett-Packard investigator Fred Adler as Kona II activities accelerated. The documents also showed a anxiety as publicity escalated following the company's Sept. 6 announcement. ``This thing is taking on a life of its own, articles are in the tabloid stage, not sure I will survive after the steam roller runs me over,'' Gentilucci said in an e-mail to Kevin Huska, who is responsible for global security, on Sept. 7. Dunn herself expressed concerns before the company made the probe public. ``Now that the proverbial sewage appears to be hitting the fan, that effort seems na‹ve and doomed from the start,'' she wrote to board members Aug. 17. One benefit the company did get from DeLia's probe: a cheap rate that was half what DeLia typically charges clients, according to his invoice. All DeLia's hours ``are billed at a discount rate of $65.00 per hour vs. normal rate of $125.00 per hour,'' his bill states. Based on DeLia's charge of $58,529.98 for his personal time spent managing the case, including daily meetings with Hewlett- Packard's legal staff, the investigator spent 900 hours on the case. --With reporting by Ian King, Rochelle Garner and Jonathan Thaw in San Francisco and Christopher Stern in Washington. Editor: Palazzo (jto) Story Illustration: To view a graph of the company's stock performance, click on {HPQ US <Equity> GP <GO>}. For copies of Hewlett-Packard documents related to Kona I and Kona II, see {HPQ US <Equity> CN CRL <GO>}. To contact the reporter on this story: Connie Guglielmo in San Francisco at (1)(415) 743-3582 or cguglielmo1 () bloomberg net To contact the editor responsible for this story: Emma Moody at (1) (212) 617-3504 or emoody () Bloomberg net. [TAGINFO] HPQ US <EQUITY> CN NI CA NI LAW NI COS NI TEC NI CPR NI CRIME NI CORPGOV NI GOV NI RULES NI CNG NI TOP #<698734.251583.1.0.7.4.25># -0- Oct/03/2006 04:04 GMT ------------------------------------- You are subscribed as lists-ip () insecure org To manage your subscription, go to http://v2.listbox.com/member/?listname=ip Archives at: http://www.interesting-people.org/archives/interesting-people/
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- Hewlett-Packard Paid $325,000 to Trace Source of Boar David Farber (Oct 03)