Re: [TSCM-L] Re: Fwd: [ISN] Intrigue in High Places from kondrak on 2006-09-08 (file.mbox)

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<html><div style='background-color:'>Update on the Hewlett-Packard story from New York Times - 
<A href="http://www.nytimes.com/2006/09/07/technology/07hewlett.html?th=&emc=th&pagewanted">http://www.nytimes.com/2006/09/07/technology/07hewlett.html?th=&emc=th&pagewanted</A>...
"September 7, 2006
Leak, Inquiry and Resignation Rock a Boardroom
By Damon Darlin
SAN FRANCISCO, Sept. 6 - As corporate intrigues goes, it is hard to beat this:an uproar over news leaks from the boardroom, a cloak-and-dagger investigation, allegations of spying and double-dealing, and a clash involving some of Silicon Valley's best-known names that could end in lawsuits and possibly criminal charges.
The furor at Hewlett-Packard, the giant personal computer and printer company, began unfolding when Thomas J. Perkins, a pioneer venture capitalist, quit the board after an investigation pointed to a friend on the board as the source of the news leaks.
Mr. Perkins's pigue turned to outrage when he learned that investigators working for the company had posed as the directors themselves, armed with at least part of their Social Security numbers - a  method commonly used by hackers and identity thieves - to obtain the directors' personal phone records.
Those tactics are now the focus of a criminal investigation by the California attorney general - and the heart of the corporate intrigue.
It is the latest episode in a soap opera that began in early 2005 with the board's ouster of its chief executive, Carleton S. Fiorina, after press reports surfaced about directors' dissatisfaction with her. Ms. Fiorina, for a time the country's most prominent female executive, will have her own say in a much-anticiipated memoir arriving next month.
Mr. Perkins, in a letter to his former board colleagues, said the whole affair amounted to 'probable unlawful conduct, improper board practices, breakdowns in corporate governance' and general disarray at a company with which he was long associated. His anger seemed directed in particular at the chairwoman, Patricia C. Dunn, who ordered the investigation.
That he was the only one of 11 directors to resign suggests that the case for an ethical and legal breach is not clear.
But Silicon Valley - and much of the rest of corporate America - was nonetheless agog Wednesday at the dysfunction within a boardroom's normally clubby confines.
'Once a board has gotten to the point when people are hiring private investigators to snoop on other directors, you have a big problem,' said Mitchell Kertzman, a partner at Hummer Winblad Venture Partners, a venture capital firm in San Francisco. 'What we are learning about now is more of a symptom of the tearing apart of the board. It shows you how bad things got.'
Mr. Perkins, who was briefly married dto the best-selling author Danielle Steel and recently wrote a racy novel titled  Sex and the Single Zillionaire, did not respond to requests for comment. A representative said Mr. Perkins was in the Mediterranean on his new $100 million 287-foot yacht, the Maltese Falcon, and did not want to be disturbed.
For Hewlett-Packard, the quintessential Silicon Valley company, the upheaval comes at an improbable time: the troubles that preceded Ms. Fiorina's dismissal have given way to strong growth in revenue and profits under her successor, Mark. V. Hurd. (Who is to thank for that turnaround is expected to be a central theme of Ms. Fiorina's book.)
The company concern over leaks from its board began while Ms. Fiorina was chief executive. She asked the Silicon Valley law firm of Wilson Sonsini Goodrich & Rosati to interview board members to discover the source of the leak. But nothing came of that investigation. After Mr. Hurd succeeded Ms. Fiorina, the leaks stopped.
But in January, an article appeared on the technology news Web site CNET about a management meeting. The report described the company's strategy with dealing with the chip makers Intel and Advanced Micro Devices, as well as possible acquisitions. It struck a nerve among the top executives not only because strategy was revealed but because leaks could open the company up to charges of securities violations because of selective disclosure of information.
Ms. Dunn, who had been named chairwoman after Ms. Fiorina's ouster, wanted to restore the trust among the board members - a trust that had been tested as the company went through three years of infighting, beginning with a proxy fight over its acquisition of Compaq Computer. Mr. Perkins, according to a top company executive, was as enthusiastic as Ms. Dunn was to catch the leaker.
With a good reason: a board cannot function if its members do not trust each other. 'Leaky boards are a huge issue,' said Jeffrey A. Sonnenfeld, a professor at the Yale School of Management who advises companies on corporate governance issues. It undermines trust among members and prevents the free flow of advice that board members are paid to provide to corporate managers. Stopping leaks, he said, 'really is a noble motive here, but the techniques used is a separate issue.'
Ms. Dunn, the former head of Barclay Global Investors, ordered a further investigation in January. But this time, it was turned over to the company's office of general counsel, which turned to a consulting firm with 'substantial experience in conducting internal investigations,' as the company described it. Hewlett-Packard had refused to name the firm, but said it had used it before.
According to a Hewlett-Packard filing with the Securities and Exchange Commission on Wednesday, the consulting firm then subcontracted to another group of investigators to obtain information about phone calls between Hewlett-Packard directors and outsiders.
When the investigators were done, the results were presented to the full board, which includes Mr. Hurd. The evidence pointed to George A. Keyworth II, the board's longest-serving member, with 20 years' service. H.P. said that Mr. Keyworth admitted being the source of the leak and that the board, after discussion, asked him to resign. He refused.
At that point, Mr. Perkins announced his own resignation. Both Mr. Perkin's representatives and company officials say Mr. Perkins accused Ms. Dunn of betraying him. According to Mr. Perkins's spokesman, it was because Ms. Dunn had agreed to handle the matter privately and quietly. But Viet D. Dinh, Mr. Perkins's lawyer on this matter, also said that Mr. Perkins was upset with the extent of the investigation. He was the sole member to object.
'It doesn't surprise me at all,' said Sanford R. Robertson, a partner and founder of Francisco Partners, a technology leveraged buyout firm in Menlo Park, Calif., and founder of the investment banking firm Robertson Stevens. 'He is very much a man of principle. If he thought that something was not being done correctly, he would stand up and be counted in that regard.'
Mr. Dinh, who serves on the board of the News Corporation with Mr. Perkins, said, 'When red flags go up in his mind, he asks questions.'
The company would not make Ms. Dunn available for comment.
Mr. Perkins resignation was reported by Hewlett-Packard, which gave no cause. Mr. Perkins took nearly a month off, spending most of the time on his yacht. When he returned to Silicon Valley in June, he pressed the company to amend its filing with the Securities and Exchange Commission to reflect the reasons for his resignation - a request it rebuffed until Wednesday - and agitated for HP to investigate its methods. The Wilson Sonsine firm was asked by a board committee to do the job.
What Mr. Perkins did not know at the time - indeed, HP said no one on the board did - was that the leak investigators had used a form of subterfuge know as 'pretexting,' or false pretenses, to obtain the directors' official phone records. That was revealed in an e-mail response when Mr. Perkins directly asked Larry W. Sonsini, the chairman of Wilson Sonsini, about the investigative methods.
The Wilson Sonsini investigation concluded that the use of pretexting 'was not generally unlawful.' But the law firm could not say whether the consulting firm that Hewlett-Packard hired, or the subcontractors it used, 'complied in all respects with applicable law.'
Meanwhile the relationship between Mr. Perkins and Mr. Sonsini's firm has grown strained. A Wilson Sonsini lawyer, Boris Feldman, accused Mr. Perkins of discussing internal Hewlett-Packard deliberations with others last month. The lawyer went on to demand that he name those he spoke to and what documents he gave them.
Mr. Perkins's response was just as rough. Mr. Dinh, who had served from 2001 to 2003 as assistant United States attorney general for legal policy, helping draft the Patriot Act, accused the law firm of conflicts of interest. He accused the company of 'sanitizing' the minutes of the board meeting in which Mr. Perkins resigned. He told the company the Mr. Perkins was a victim of possible fraud, identity theft and misappropriation of personal records.
'We have good reason to believe that HP and/or its agents were responsible for these activities,' he said in a letter to the company.
In the meantime, Mr. Perkins contacted AT&T, his phone carrier. The company investigated and revealed that, indeed, Mr. Perkins's records had been hacked. The phone company said that someone had tricked an AT&T service representative into revealing the multidigit code that would allow a person to set up an online account for access to billing statements. The account was created using the last four digits of Mr. Perkins's Social Security number, and his January bill was viewed.
A fake e-mail address was used to set up the account - <A href="mailto:redso..._at_yahoo.com">redso..._at_yahoo.com</A> - but AT&T did trace the actual Internet address.
As part of a criminal investigation, investigators with the California attorney general, whom MR. Perkins had notified, discovered that the Internet address belonged to a subscriber of Cox Communications, an Atlanta-based cable TV and Internet provider. On August 31, the attorney general filed a search warrant to obtain the name of the person using that address to gain access to Mr. Perkins's records.
A spokesman for the attorney general said that two possible felony charges were being considered: the unauthorized use of personal identifying information for unlawful purposes and the unauthorized access of a computer database. Hewlett-Packard said it intended to co-operate fully with the criminal investigation.
The search warrant affidavit, on file in Marin County in California, where Mr. Perkins lives in an expensive hilltop home with ocean views, also reveals that the attorney general and AT&T are considering civil lawsuits as well.
Miguel Helft contributed reporting from New York for this article."
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THE END 
Reg Curtis/VE9RWC
<BLOCKQUOTE style="PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #a0c6e5 2px solid; MARGIN-RIGHT: 0px">
<HR color=#a0c6e5 SIZE=1>
From: "James M. Atkinson" <j..._at_tscm.com> Reply-To: TSCM-..._at_googlegroups.com To: TSCM-..._at_googlegroups.com Subject: [TSCM-L] Re: Fwd: [ISN] Intrigue in High Places Date: Thu, 07 Sep 2006 12:39:53 -0400 HP knew that it was illegal before they did what they did, and likely thought that they would get away with it. Senior management at HP in the past few years has been truly appalling, and this is not the only problem or incident. -jma At 11:10 PM 9/6/2006, John Young wrote: 
<BLOCKQUOTE class=cite cite="">HP's SEC filing today provides a masterful dodge the bullet for the eavesdropping called by any other name: <A href="http://cryptome.org/hp-spy-sec.htm">http://cryptome.org/hp-spy-sec.htm</A> Lo, HP now says it was told just recently that the spying was probably illegal. 
 We Hunt Spies, We Stop Espionage, We Kill Bugs, and We Plug Leaks. James M. Atkinson, President and Sr. Engineer Granite Island Group 127 Eastern Avenue #291 Gloucester, MA 01930-8008 Phone: (978) 546-3803 Fax: (978) 546-9467
Web: http://www.tscm.com/</A> E-Mail: <A href="mailto:jm..._at_tscm.com">jm..._at_tscm.com </A> 
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