Dunn resigns from Hewlett-Packard board

Patricia Dunn, the embattled chairman of Hewlett-Packard, was forced to sever all her ties with the computer group immediately on Friday as an emotional Mark Hurd sought to contain the fallout from a deepening spying scandal that has rocked the computer group.

Ms Dunn’s abrupt departure came only ten days after HP’s board had agreed to let her stay on as chairman until January, and to remain as a director after that. Mr Hurd, chief executive, said he would assume the role of chairman immediately.

Mr Hurd said lawyers appointed earlier this month and working on his behalf, rather than for the board, had uncovered new information that was “very disturbing to me.” He added that HP may never uncover all of the facts regarding its controversial probe into boardroom leaks.

An HP spokesperson refused to comment on what new information had come to light or whether this was what had led the board to ask Ms Dunn to resign so soon after it had supported her.

However, one of the lawyers working for Mr Hurd said that Ms Dunn had personally hired the private investigation firm that carried out some of the work in the controversial leak investigation. Ms Dunn has said, including in an interview with the Financial Times, that she did not have close knowledge of the investigation, in part because she herself was one of those who were investigated.

Jim Brosnahan, a lawyer for Ms Dunne, denied that her departure was forced by new information about her involvement in the investigation, but said that the board had been forced to act by the intense media attention to the case.

According to a person close to the company, two employees who had played a central role in the investigations are also in the process of leaving the HP, though the terms of their departure were not disclosed. The two are Kevin Hunsaker, a senior lawyer in charge of HP’s ethics programme, and Anthony Gentilucci, part of an internal HP global investigations unit.

Friday’s actions marked a reversal in the face of mounting pressure over questionable tactics employed during an investigation into boardroom leaks that occurred on Ms Dunn’s watch.

HP came under investigation by state and federal authorities earlier this month after it revealed that its operatives used false pretences to acquire private telephone records of board members, journalists, employees and others targeted in an operation to uncover the source of the leak.

Mr Hurd yesterday confirmed that the company’s investigation had extended far beyond telephone records to include physical surveillance and other covert operations against board members, journalists and their families.

Mr Hurd’s lawyers said Ms Dunn and Ann Baskins, HP’s general counsel, had received “regular updates” on the probe’s progress over a period of months this year.

They said members of HP’s investigation team – including Mr Hunsaker and others outside the group – had offered “assurances that the techniques being used in the investigation were legal”. Ms Dunn continued to defend her role yesterday, saying she had not proposed the specific methods used in the investigation. “Unfortunately, the people HP relied upon to conduct this type of investigation let me and the company down, I continue to have the best interests of HP at heard and thus I have accepted the board’s request to resign,” she said.

Mr Hurd said he had received a report in March detailing the results of the probe, including the techniques employed, but that he had not read it. His voice broke as he offered an apology to those caught up in the board’s investigation.

“The people of HP don’t deserve this, nor do any of the people who were impacted,” he said. “Now that we know the depth of what has transpired, I take full accountability to drive the actions to set it right.”

Concerns that Mr Hurd could be caught up in the legal fallout of the scandal sent HP shares in HP down 5 per cent on Thursday. Bill Lockyer, California attorney-general, yesterday said his office had not yet uncovered found evidence linking Mr Hurd to any illegal activity in connection with the scandal.

Mr Hurd, who has presided over a revival at HP since he took over from Carly Fiorina as chief executive last year, said the company had appointed Bart Schwartz, a former US prosecutor, as counsel to “ensure we have the appropriate level of discipline and rigour so…that this type of situation can never occur again.”