Congress Takes HP To The Woodshed

CEO Hurd apologizes for the shady behavior and promises to set things right.
The machine-gun fire of camera shutters foreshadowed verbal combat at last week's congressional hearings on Hewlett-Packard's investigations into boardroom leaks. Heated exchanges between committee members and HP principals and partners--including CEO Mark Hurd and former chairwoman Patricia Dunn--offered glimpses into the company's struggles to account for, and remedy, its questionable tactics. "I have to ask our witnesses," said Rep. John Dingell, D-Mich., "what were you thinking?"

The House subcommittee hearings began with former HP general counsel Ann Baskins, who had just resigned that morning. Baskins would become the first of 10 former HP employees and outside investigators formerly under contract with the company to invoke their Fifth Amendment right to not testify against themselves.

What would Packard do? Hurd makes nice.

What would Packard do? Hurd makes nice.

Photo by Mandel Ngan/AFP/Getty Images
One catalyst for the hearings was HP's use of pretexting--obtaining phone records under false pretenses. Private investigators working for HP used pretexting to get phone records of every board member and several journalists covering meetings last year and early this year, in an attempt to ferret out leaks. The following exchange between Dunn, who authorized the investigations, and Rep. Joe Barton, R-Texas, was typical:

Barton: "If I came to you and asked for six months of your phone records, would you give them to me?"

Dunn: "In your position, I would give you my phone records."

Barton: "Well, praise the Lord. I wouldn't give you mine."

Dunn: "I hope that doesn't mean that you have something to hide."

Committee members urged Congress to pass legislation to ensure that personal phone records are kept private. Although California law expressly prohibits pretending to be someone else to secure such records, members said that federal regulations are too vague. "Most Americans believe that their phone records are theirs, that they're private property that should only be accessed with their permission," Barton said. The committee passed a bill addressing this issue in May, but it has yet to see a vote on the House floor.

Reporter Targeted

Another sore point for committee members was HP's use of e-mail "tracers," zip file attachments that, when opened, send the IP address of the recipient back to the sender. In the course of the boardroom investigations, HP sent one such file to a reporter, hoping to follow the trail to the source of the leaks. According to HP investigator Fred Adler, e-mail tracers were used 12 to 24 times since he joined the company in 2003, though never on customers. "It's equivalent to you going through my mailbox," said Rep. Michael Burgess, R-Texas.

Despite the acrimony, HP chief Hurd escaped the hearing needing only a Band-Aid or two. He apologized--as he had the previous week in a news conference--to those whose privacy had been breached and to employees and shareholders. Members accepted his assertion that he'd only recently discovered some of the tactics used in the probe. "I wish I would have asked more questions, and there are signs I wish I had caught," Hurd said. "I'm responsible for the company, which means I'm responsible for fixing it."

Hurd said those affected would receive details on what data had been collected on them. HP is auditing its investigative techniques, having brought in former U.S. Attorney Bart Schwartz to review the company's practices, and Hurd pointed out that several of those involved in the scandal had left the company or no longer had contracts. HP has stopped the use of pretexting and is analyzing whether e-mail tracers should be used at all, even in cases of stolen goods, Hurd said.

"There'll never be a time that we don't make mistakes," Hurd said in closing, attributing the quote to HP co-founder David Packard. He'd earlier said Packard never would have approved of pretexting. Now Congress should prove it doesn't either.