Video: HP considered spying on newsrooms news services
updated 9/20/2006 9:30:09 PM ET 2006-09-21T01:30:09

Hewlett-Packard Co.’s chief ethics officer learned the company’s detectives were relying on shady tactics to gather private phone records long before a boardroom battle over media leaks triggered criminal and congressional investigations into the privacy intrusions.

The latest evidence about HP’s internal knowledge of its contractors’ subterfuge emerged in excerpts from e-mails and other documents published Wednesday in The New York Times.

The leaked documents are likely to raise more questions about whether HP management simply looked the other way while detectives hired by the company pried loose the private phone records of its directors and at least 12 other people by using a bit of misrepresentation known as “pretexting.”

To help them fool the phone companies, HP’s detectives obtained and then used the targeted individuals’ Social Security numbers.

The pretexting piece of the covert operation is now under investigation by state and federal authorities.

A congressional panel has scheduled a Sept. 28 hearing that will include testimony from HP Chairwoman Patricia Dunn, who authorized the company’s pretexting probe to plug a boardroom leak but has said she didn’t realize the detectives were going to such extremes until recently.

But Kevin T. Hunsaker, HP’s chief ethics officer, expressed his concerns about the legality of the investigators’ methods in a Jan. 30 e-mail to Anthony R. Gentilucci, who manages the company’s global investigations unit in Boston, according to the Times.

“Is it all above board?” Hunsaker wrote in part of the e-mail.

Gentilucci wrote back to inform Hunsaker that one of HP’s detectives — Ronald DeLia of Security Outsourcing Solutions — had investigators “call operators under some ruse.”

“I think it is on the edge, but above board,” Gentilucci’s e-mail continued. “We use pretext interviews on a number of investigations to extract information and/or make covert purchases of stolen property, in a sense, all undercover operations.”

In his response, Hunsaker wrote, “I shouldn’t have asked...”

The exchange threatens to raise nettlesome issues for Dunn and other top executives because the ethics officers at large companies are expected to alert their bosses as soon as they smell a potential problem, said Todd Bailey, a business law professor specializing in ethics at Miami University in Ohio.

“When you know something toxic might be happening, you are supposed to take remedial action,” Bailey said. “You are not supposed to just sit there and let more dead canaries pile up in the coal mine.”

Kirk Hanson, executive director for the Markkula Center for Applied Ethics, agreed. “This looks real bad for HP,” he said. “The ethics officer is supposed to be both a listener and an adviser on ethical issues.”

HP spokesman Ryan Donovan declined to comment Wednesday.

The Palo Alto-based company’s efforts to plug its initial boardroom leaks has opened the floodgates on another round of media leaks that have made HP look more like a paranoid relic from the Watergate era than a high-tech innovator.

At one point in its boardroom investigation, HP drew up plans to plant spies in the San Francisco offices of The Wall Street Journal and Cnet, an online technology news site, according to documents provided to The New York Times. The operatives would have posed as clerks or cleaning crews.

It’s unclear whether HP ever actually tried to infiltrate the Journal or Cnet.

Reporters from both the Journal and Cnet had written stories based on information that Dunn and HP’s former chief executive, Carly Fiorina, believed had been leaked by board members. Fiorina initiated a 2005 investigation only to be ousted. Dunn then renewed the probe in 2006.

Cnet spokeswoman Sarah Cain said the company is taking the matter seriously and has asked HP for a full accounting of its actions. “We are continuing to gather all relevant facts and to analyze appropriate next steps,” she said. A spokesman for Dow Jones & Co., publisher of The Wall Street Journal, declined to comment.

Based on other media leaks about the HP investigation, the company’s detectives also followed the movements of some directors and reporters and even tried to install snooping software on the computer of a Cnet reporter.

California State Attorney General Bill Lockyer said Wednesday he does not know when his office will issue indictments in its investigation.

Lockyer’s office said last Wednesday it could file charges against individuals in HP, as well as outside contractors, within a week. But seven days later he said he has not yet decided whom to indict.

“We’re still in the middle of following the chains of communications,” Lockyer said in a telephone interview. “We don’t yet know for sure which people (will be indicted) or how soon we’ll complete the investigative work.”

Although the leaks have generated embarrassing information about HP, investors remain unfazed by the furor. HP shares gained 43 cents on the New York Stock Exchange Wednesday to close at $36.78 — slightly above the price before the scandal erupted two weeks ago.

The Associated Press and Reuters contributed to this report.


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