Mark Hurd named HP chairman, Dunn to leave earlier than expected

Posted by Wolfgang Gruener

Palo Alto (CA) - HP's boardroom scandal reached a new level on Friday when chief executive officer Mark Hurd was named chairman, replacing Patricia Dunn three months earlier than originally announced. A counseling law firm also confirmed that Hurd was aware of parts of the investigation, which included an email tracer, the search of phone records and the surveillance of individuals.

Responding to a wave of media reports about HP's boardroom leak scandal. Chief executive Mark Hurd today addressed journalists and provided what he said the facts about the leak investigation that are available at this time. He mentioned that not all facts have been collected yet and in fact and may never become available in their entirety.

However, the data published so far and the outcry of media was apparently enough to replace the firm's current chairman, Patricia Dunn, immediately and not, as earlier announced, in January of next year. Hurd will be replacing Dunn, who will not remain on HP's board, as previously indicated by the company.

Mike Holston of law firm Morgan Lewis, who was retained by Hurd on 8 September to investigate the scandal, provided some visibility relating to the questionable investigations that have occurred over a time frame of more than one year. According to Holston, there were two phases, the first of which was implemented after initial leaks. It focused on an investigation of reporters of Business Week, the New York Times and the Wall Street Journal. The first phase, initiated in early 2005, concluded in Summer 2005 with no result. After further leaks had occurred in January of 2006, the second phase was started the same month and ended on 18 May 2006.

That phase, according to Holston, was handled in significant part by outside consulting firm SOS and included actions to obtain the phone records of two HP employees, seven board members and nine journalists. It also covered obtaining social security numbers of one HP employee, three board members and four journalists in order to get access to telephone call information.

Holston also confirmed that a "tracer" email was sent in January of 2006 to one journalist in an effort to find out if the journalist would forward the email to the source to uncover the source of the leak. The message was sent from a fictious persona that was portrayed as a "disgruntled senior executive who was willing to share information with the journalist." The investigation also engaged into the physical surveillance of one board member as well one journalist and his residence, which may have included the search of "her" trash.

Holston was careful with bringing any HP employees into connection with the questionable practices of the investigation. Mark Hurd, who said that he was aware of the second phase of the investigation, was not aware of every detail of the practices. In case of the tracer email, Holston said that Hurd approved the content and concept of the message, but there "is no evidence that he approved the tracer."

Holston said that his firm has searched through more than 1 million pages of documents relating to the board leak investigation so far. He did not say how much longer the investigation into the scandal will take.