HP Spying Scandal Offers Window into Board Battles

Former Hewlett-Packard Chairwoman Patricia Dunn is aggressively defending herself against charges she masterminded a criminal spying campaign against other board directors and journalists. As the HP fallout continues, details about bitter divisions on the board are emerging.

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Now here's the latest on the Hewlett-Packard scandal. Three private investigators and two former company insiders are charged with illegally spying on HP's board members and on reporters.

HP's investigators secretly gathered phone records and tailed the board members' relatives and even dug through people's trash in an effort to find the source of boardroom news leaks.

This corporate soap opera has exposed a high-powered clash among the computer maker's board of directors. Here's NPR's Scott Horsley.

SCOTT HORSLEY: The spy scandal that's kept Hewlett-Packard in the headlines for the last month might never have come to light were it not for man named Tom Perkins. The millionaire venture capitalist angrily quit the HP board five months ago after company spies exposed his friend and fellow board member, George Keyworth, as the source of news leaks.

Perkins couldn't be reached for comment, since he's been sailing the Mediterranean aboard his giant yacht, the Maltese Falcon. But within a few weeks of that stormy board meeting in May, Perkins raised the mater with a lawyer he knew from another board, Viet Dinh.

Mr. VIET DINH (Attorney): Tom asked for a moment of my time and started laying out the circumstances of his resignation and the underlying investigation into the alleged leak of board information.

HORSLEY: Perkins knew part of that investigation involved secretly obtaining people's personal phone records, and Dinh, a former Whitewater counsel and top Justice Department lawyer in the Bush administration, quickly recognized what HP's in-house lawyers did not.

Mr. DINH: Having been around Washington and participating in a number of leak investigations, my immediate reaction is that I could not see how this possibly could have been done in a legal manner.

HORSLEY: Perkins began raising complaints about the HP probe, and a week ago California prosecutors filed felony charges against five of the people involved.

As Deputy Attorney General Robert Anderson explained, the first name on the criminal complaint is that of HP's former chairwoman, Patricia Dunn.

Mr. ROBERT ANDERSON (Deputy Attorney General, California): Patricia Dunn, in our view, was the catalyst for the investigation. And Patricia Dunn took actions with, in our view, the required criminal intent and knowledge.

HORSLEY: Dunn's attorney called the charges the culmination of a well-financed and highly orchestrated disinformation campaign.

Dunn, who's undergoing chemotherapy, was not available for comment, but she told 60 Minutes last week the orchestra leader behind that campaign was her former boardroom nemesis, Tom Perkins.

Ms. PATRICIA DUNN (Former Chairwoman, Hewlett-Packard): He wanted me off the board. This was to get me off the board. I don't know if he ever thought through the consequences that would go beyond my getting off the board.

HORSLEY: Dunn says Perkins falsely exaggerated her role in directing the spy campaign. She insists she relied on others, both inside and outside HP, to decide how to find the leaker, and to make sure the spying tactics were legal.

Ms. DUNN: The idea that I supervised, orchestrated, approved all of the ways in which this investigation occurred is just a complete myth.

HORSLEY: Prosecutors' own arrest affidavit tends to support Dunn's claim that she believed HP's techniques were legal. Dunn was on a conference call, for example, early on in the leak probe, when HP's general counsel asked an investigator about impersonating people to obtain their records from the phone company. The investigator assured the general counsel there were no laws against that.

Stanford law professor Robert Weisberg says that's a point for Dunn's defense.

Professor ROBERT WEISBERG (Stanford University): Dunn didn't inquire very much, but she was never given any reason to inquire very much. And we forgive her to some extent for having relied.

HORSLEY: Both Dunn and Perkins describe the split over the leak investigation as emblematic of a larger divide between old and new boardroom cultures. Dunn told Congress she wanted to bring modern controls and processes to HP, while attorney Dinh says Perkins wanted to preserve the traits of a nimble Silicon Valley startup.

Mr. DINH: He is focused on the entrepreneurial spirit, the growth of the company. And I think he thought that Ms. Dunn had undue emphasis on processes and bureaucratic structures.

HORSLEY: Ultimately, neither side won this boardroom battle. Perkins quit in a huff, and Dunn was forced out a few months later.

Now the fight has spilled out of the boardroom into Congress and the courts, and Hewlett-Packard, which tried so hard to keep its directors' discussions private, finds its secrets laid bare on a very public stage.

Scott Horsley, NPR News.

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