HP: Grueling day for Hurd & Dunn
CEO Hurd says he missed red flags, former chairman Dunn says she never approved pretexting; other HP officials take the Fifth.
By Grace Wong, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Lawmakers grilled Hewlett-Packard officials about the company's controversial spying program Thursday but few new details about what went wrong at the Silicon Valley heavyweight were revealed.

Members of the House Energy and Commerce Committee's subcommittee on investigations denounced the methods HP used to find the source of boardroom leaks and expressed shock over how the company's leadership could think the practices used in the investigation were ethical.

SCANDAL AT HP
A controversial leak investigation has enveloped Silicon Valley stalwart Hewlett-Packard.
Sept. 6
HP discloses that "pretexting" was used during an investigation into company leaks. California Attorney General Bill Lockyer says he's investigating the tactics used.
Sept. 8
HP confirms the phone records of nine journalists were targeted during the internal probe.
Sept. 10
HP's board of directors convenes an emergency meeting but no action is taken.
Sept. 11
HP says the U.S. Attorney for Northern California has requested information related to its probe. House Committee on Energy and Commerce asks HP to hand over documents related to the investigation.
Sept. 12
HP says Patricia Dunn will step down as chairman of the board in January and will be succeeded by CEO Mark Hurd. Board member George Keyworth resigns.
Sept. 22
Dunn resigns as chairman and member of the board. Hurd takes over chairman position.
Read the documents
  • Read Mark Hurd's prepared testimony
  • Read Patricia Dunn's prepared testimony
MORE ON HP
HP's CEO managed for a while to stay above the fray of the egregious leak investigation and its aftermath. Not anymore. (more)
That HP investigators got personal phone records of others without their consent shows how anyone pretending to be you can get access to your valuable personal information. (more)

Chief executive Mark Hurd testified that there were several red flags raised, but that he missed them. He also said that internal controls broke down and that the probe to find the source of company leaks turned into "a rogue investigation."

Hurd also said that he ultimately is responsible for what goes on at HP. At the end of the day, "the buck stops with me," he testified.

Hurd and former chairman Patricia Dunn both distanced themselves from the potentially illegal techniques used in the investigation. They both referred questions about the design of methods used in the probe to HP's investigative team.

That team was led by senior counsel Kevin Hunsaker, who reported to general counsel Ann Baskins. Anthony Gentilucci, HP's global security manager, and Ronald DeLia, an outside investigator, also were part of the team.

All three of the HP members of that team have since left the company and invoked their Fifth Amendment privilege against self-incrimination at the hearing Thursday.

HP, a 67-year-old company that was once widely respected for its corporate ethics, has come under fire for pretexting, the practice of obtaining personal information under false pretenses.

While HP's top leaders have apologized for the methods used during the internal probe, they have denied knowing that investigators used pretexting tactics.

Dunn testified she never approved the use of questionable tactics, saying she wasn't aware "pretexting" could involve the misrepresentation of someone's identity to obtain phone records until late June or July of this year.

At least some HP insiders were concerned about the ethical issues raised by pretexting. Fred Adler, HP's computer security investigator, testified that during the course of the investigation, he was "deeply troubled and concerned" about the methods used to obtain phone records.

Adler said he and another investigator, Vince Nye, both approached their respective managers about the legality of accessing personal call logs. The panel also referenced an e-mail Nye sent to Hunsaker, in which he warned that the techniques used in the probe were unethical and could damage HP's reputation.

Dunn, however, said those concerns never reached her and testified that she was assured by Hunsaker that all of the investigative methods used in the probe were legal.

HP outside counsel Larry Sonsini also testified, saying his firm was not involved in the design of the company's controversial spying program and that although pretexting is clearly wrong, the law isn't as clear as it needs to be.

Despite legal ambiguities, lawmakers emphasized that the top levels of HP should have known better; they should have realized that private phone records couldn't be obtained publicly. "If I called you up, would you give me your phone records?" Rep. Joe Barton, chairman of the House committee, asked Dunn. "I would," she replied.

The subcommittee had hoped to hear from more of the investigators involved with the pretexting, but several witnesses stonewalled members of the panel, choosing to invoke the Fifth.

Private investigators DeLia, Joe Depante, Cassandra Selvage, Darren Brost, Valerie Preston, Bryan Wagner and Charles Kelly all declined to testify.

Since the scandal broke more than three weeks ago, the tactics HP used to find the leaker have been revealed to include a plan to plant spies in newsrooms to sending covert photographers to trail a board director's wife to a bingo parlor.

George Keyworth eventually was fingered as the source of the leaks. He, along with Thomas Perkins, have both quit HP's board. Dunn resigned as chairman and board member last week.

HP is also being investigated by the Justice Department, California's attorney general and the Securities and Exchange Commission.

Shares of HP (Charts), which have outperformed rivals Dell (Charts) and IBM (Charts) in the last year, rose Thursday.


HP's top lawyer out

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.