Hewlett-Packard Woes Deepen as California Prepares To Indict

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The New York Sun

Hewlett-Packard Co. officials may face indictment by California’s attorney general, who said he has enough evidence to pursue charges in the deepening scandal of the computer maker’s probe of its own board of directors.

“We currently have sufficient evidence to indict people, both within Hewlett-Packard, as well as contractors on the outside,” Bill Lockyer said in an interview with The NewsHour with Jim Lehrer that aired on PBS last night.”Crimes have been committed.”

Mr. Lockyer indicated that he could start filing charges within a week, the Wall Street Journal reported. His comments are a setback for Hewlett-Packard and came hours after Patricia Dunn agreed to step down as chairwoman to take responsibility for the investigation. The world’s second-largest personal computer maker conceded that parts of the review may have been illegal. Investigators hired by a consulting firm used fake identities to obtain phone records, allowing Hewlett-Packard to trace the leaks.


Mrs. Dunn authorized the investigation and hired an outside consultant to conduct it. A third firm gained access to the phone records, Palo Alto, California-based Hewlett-Packard said in a filing last week.

Shares of Hewlett-Packard declined 83 cents, or 2.3%, to $36.09 at 11 a.m. in New York Stock Exchange composite trading. Before today, the stock had gained 4.2% since September 8 amid optimism the boardroom battle and any regulatory probes won’t hurt demand for the company’s products.

“There’s another shoe that has to fall,” a professor of management at Boston University, James Post, said. “Someone in the chain of command between the chairman and the outside counsel, which is the general counsel or someone in the general counsel, is who they are looking at.”


Ronald DeLia, who works for Boston-based Security Outsourcing Solutions Inc., was one of the private investigators involved in the probe, the Wall Street Journal reported.

A Hewlett-Packard spokesman wouldn’t discuss Mr. Lockyer’s statements other than to say the company is cooperating with the investigation.

In a memo to employees late yesterday, Mrs. Dunn apologized for the scandal, saying “If there was any way I could course-correct some aspects of the investigation, I would. I wish this had never happened.” She also defended her actions and said she couldn’t oversee every detail of the probe because she was also a subject of investigation.


The probe began as an effort to track down the source of leaked information about company strategy and board deliberations leading up to the ouster of former Chief Executive Officer Carly Fiorina in February 2005.

The private investigators used “pretexting,” in those efforts, Hewlett-Packard said, which typically involves impersonating individuals to gain personal information. The comments indicate Mr. Lockyer “believes he has that kind of evidence — that someone knew about, or someone intended to commit, or have someone else commit a criminal act,” a former U.S. Attorney, David Shapiro, said.

Mr. Lockyer said the investigators’ methods violate California’s identify theft and computer data theft laws. There is no specific law governing pretexting in California. While federal law doesn’t mention phone records, it generally prohibits pretexting to gather financial information.

The New York Sun

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