Lawmakers press HP to explain how spy scandal unfolded so intrusively

WASHINGTON (AP) _ Lawmakers denounced the intrusive tactics used in Hewlett-Packard Co.'s spying probe as a congressional hearing launched Thursday with stark comparisons between the tawdry affair

Thursday, September 28th 2006, 10:33 am

By: News On 6

WASHINGTON (AP) _ Lawmakers denounced the intrusive tactics used in Hewlett-Packard Co.'s spying probe as a congressional hearing launched Thursday with stark comparisons between the tawdry affair and the 67-year-old company's reputation for integrity.

Ousted HP Chairwoman Patricia Dunn, sitting with her attorney in the front row of the packed hearing room, listened as members of the House Energy and Commerce Committee voiced outrage at the company's probe into the source of boardroom leaks. HP used a shadowy network of private investigators who burrowed into the personal lives of journalists and HP directors, and impersonated them with a tactic known as ``pretexting'' to obtain their telephone records.

``We have before us witnesses from Hewlett-Packard to discuss a plumbers' operation that would make Richard Nixon blush were he still alive,'' Democratic Rep. John Dingell of Michigan said.

Rep. Ed Whitfield, R-Ky., chairman of the committee's investigative panel, demanded to know why, with many high-ranking HP executives and attorneys involved in the probe, ``No one had the good sense to say `Stop.'''

``It's a sad day for this proud company,'' said Rep. Diana DeGette of Colorado, the panel's senior Democrat. ``Something has really gone wrong at this institution.''

Dunn planned to testify that she discussed the conduct of the company's leak investigation with CEO Mark Hurd, board members and others in the company _ getting a clear impression that the directors were satisfied with it and that its methods were not improper.

Dunn and Hurd were appearing at the hearing with other top executives and hired detectives. Some volunteered to testify; others were attending under the summons of a congressional subpoena.

As lurid details of the affair emerged in recent weeks, HP's corporate casualties have mounted. The computer and printer maker announced the resignation of general counsel Ann Baskins on Thursday just ahead of the hearing where she was scheduled to testify, and her attorneys said she would invoke her Fifth Amendment right against self-incrimination and not answer lawmakers' questions.

The departure of Baskins, who has worked for the company since 1982, follows those of Dunn, two other directors and two high-level employees.

``Ms. Baskins always believed that the investigative methods that she knew about were lawful, and she took affirmative steps to confirm their legality,'' her attorneys told the committee in a letter Thursday. ``Ms. Baskins repeatedly sought and obtained assurances from a senior HP counsel that the techniques about which she knew were entirely lawful.''

Hewlett-Packard, the world's largest technology company and long a respected anchor of Silicon Valley, engaged a private detective firm for its quest to trace and stem boardroom leaks to journalists of confidential information. The firm in turn hired a network of investigators who masqueraded as HP directors and employees and as reporters to obtain their telephone records, surveilled them and their relatives, sifted through their garbage, and used an e-mail sting to dupe one of the reporters.

``I never doubted ... that what they were doing was legal,'' Dunn said in her testimony, which was released by the committee on Wednesday.

Dunn said she asked Ronald DeLia, the operator of the detective firm hired by HP, ``at every point of contact for his representation that everything being done was proper, legal and fully in compliance with HP's normal practices.''

Dunn disclosed that she learned in the spring of 2005 that the probe involved obtaining access to phone records.

Besides the inquiry by the House committee, federal and California prosecutors are investigating whether company insiders or outside investigators broke the law. California Attorney General Bill Lockyer has said he has enough evidence to indict HP insiders and contractors. And the Securities and Exchange Commission is pursuing a civil inquiry.

Hurd, who succeeded Dunn last Friday as chairman of Palo Alto, Calif.-based HP, apologized to those whose privacy was violated in the leak investigation.

``How did such an abuse of privacy occur in a company renowned for its commitment to privacy? It's an age-old story. The ends came to justify the means,'' he said in prepared testimony for the congressional hearing.

Hurd said Dunn had told him of the existence of the investigation, ``but I was not involved in the investigation itself.''

So closely tied was DeLia's firm, Security Outsourcing Solutions Inc. of Needham, Mass., to Hewlett-Packard _ for which it worked almost exclusively for eight years _ that Dunn refers to the firm as a ``captive subsidiary'' of Hewlett-Packard.

In a twist, it was DeLia who performed the background check on Hurd when the company was vetting him last year as a candidate for CEO.

Besides Dunn, Hurd and Baskins, Larry Sonsini _ HP's outside lawyer and one of Silicon Valley's most influential figures, who assured company executives of the legality of the spying probe _ agreed to appear at the hearing.

The committee has ordered DeLia and two other key figures in the leak probe to testify: Kevin T. Hunsaker, until recently the company's chief ethics officer, and Anthony R. Gentilucci, who managed HP's global investigations unit in Boston.

Five private investigators believed to have served as the foot soldiers in the company's efforts, also were subpoenaed to testify.

HP shares were up 1.2 percent at $35.80 on the New York Stock Exchange as the hearing was underway Thursday morning.