HP scandal turns into a real whodunnit

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Hewlett-Packard is not out of the woods yet.

Hours after Patricia Dunn, chairman of the $86bn computer giant, said she would step aside as a result of a boardroom spying scandal on Tuesday, California’s top prosecutor said he had enough evidence to file criminal charges in the case.

Bill Lockyer, the California attorney-general, told an American news programme that he had “enough evidence to indict people both within HP as well as contractors on the outside” following revelations that HP investigators had obtained private telephone records by posing as board members and journalists.

“Crimes have been committed,” said Mr Lockyer. “People’s identities being taken falsely is a crime. People gaining access to computer records that have personal information, in California – that’s a crime.”

On Wednesday, his office said charges could come within a week.

Lawyers specialising in white collar crime say there is likely more behind Mr Lockyer’s comments than mere political posturing.

Michael Piazza, a former SEC lawyer and partner at Dorsey & Whitney, says US authorities have turned far more aggressive in their pursuit of corporate criminals in the wake of their success at Enron and WorldCom.

He says the recent travails of Anthony Pellicano, Hollywood’s “PI to the stars”, who was denied bail after being indicted on charges of racketeering, wiretapping and identity theft after he was found to have tapped telephone lines on behalf of his celebrity clients, could be ominous for those involved in the HP scandal.

“There have been more than a few people who have been tainted through their association with Pellicano,” says Mr Piazza.

In February, Los Angeles prosecutors indicted Terry Christensen, the founder of one of LA’s biggest law firms, alleging that he paid Mr Pellicano $100,000 to tap the phones of Lisa Bonder Kerkorian, the ex-wife of Kirk Kerkorian, the billionaire corporate raider.

Although no wiretapping has been alleged thus far in the HP case, Mr Piazza says he sees “some definite parallels” with the Pellicano scandal.

Ann Baskins, HP’s general counsel and secretary, is among those still under pressure. As HP’s top lawyer, it would have fallen to her to make sure any leak investigation was carried out.

Another subject of discussion is Larry Sonsini, a founding partner of Wilson, Sonsini, Goodrich and Rosati, who acts as outside counsel to the HP board.

“Larry is a very well respected attorney and he’s very respected at what he does,” says Mr Piazza.

Still, he says, “watching the LA attorney-general go after some of these high-profile lawyers in the Pellicano case has a lot of people watching what’s going on at HP”.

A Wilson, Sonsini spokeswoman on Wednesday stressed that Mr Sonsini had played no role authorising or managing the leak investigation – backed up by HP’s statements to US regulators.

In a statement following news of her resignation on Tuesday, Ms Dunn acknowledged that the board investigation had included “certain inappropriate techniques”.

At issue is who, both within HP and on the outside, was briefed on and signed off on the specific techniques that were employed by the company’s private investigators. So far, HP has taken no action against Ms Baskins, who is married to a partner at Wilson, Sonsini.

In a July e-mail exchange with Tom Perkins, an HP board member who resigned in protest over the board’s spying tactics, Mr Sonsini said he was “not involved in the design or conduct of the investigation”, which was “run by the HP legal department with outside experts”.

Most disturbing to shareholders would be any legal action against Mark Hurd, chief executive, who is set to assume the role of chairman after Ms Dunn steps down in January.

Mr Hurd has led a resurgence at HP since he took over as chief executive following the ousting of Carly Fiorina last year.

One lingering question is whether Mr Hurd was briefed on the investigators’ tactics by Ms Dunn, Ms Baskins or other members of the team overseeing the boardroom investigation.

Although HP has refused to name the investigators it used to uncover the boardroom leaks, media reports on Wednesday named a Boston-based private investigator in connection with the case. HP’s legal troubles may not stop with the California attorney-general. Federal prosecutors, along with the FBI and Congress, are also looking into the scandal.

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