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Hewlett-Packard has come under the scrutiny of Californian and Federal authorities over its handling of a board-level dispute that has led to accusations of illicit leaks to the press and illegal access by the company to its own directors’ personal phone records.
The dispute spilled over into full view on Wednesday after the US computer group lodged its version of events in an official filing, countering accusations from a former director that have prompted an unusual public bust-up at the top of a large US corporation.
The row erupted over an internal investigation into the leaks that began early last year, shortly before former chief executive officer Carly Fiorina was sacked by HP’s board.
Tom Perkins, who resigned as a director in May this year, has written to the board complaining that his own phone records were “hacked” by the company and said he had stepped down “solely to protest the questionable ethics and the dubious legality of the chairman’s methods” in conducting the internal leak investigation.
HP has confirmed the validity of the letters, which were obtained by the FT.
While it confirmed that an investigator hired by the company had obtained directors’ phone records, HP said that the practice – known as “pretexting” – was “not generally unlawful”. It also said it had asked another director, George Keyworth, to resign for leaking board-level discussions to the press. Mr Keyworth had refused to step down and would not be renominated as a director at the annual shareholder meeting next year, the company said.
HP said it had received an informal enquiry from the California attorney-general asking for information about its handling of the internal investigation. Meanwhile, the Securities and Exchange Commission has sent the company a comment letter asking it to explain why it did not file a public disclosure about Mr Perkins’ reason for leaving in May. At the time, HP said only that he had not left over a disagreement with the company.
Mr Perkins’ phone records were accessed earlier this year, according to a letter sent to him by AT&T. According to a consumer advisory issued by the Federal Trade Commission, pretexting “is against the law”.
In its filing, however, HP said it believed that at the time the practice was legal, though some states had since outlawed it. It added that it had been told by the outside investigator that the investigation was conducted within the law, though it had not been able to verify that directly.
In his letter to the company, Mr Perkins said that HP had an obligation under US securities law to disclose the reason for his resignation at the time he left. However, the company said that, since his dispute was a personal one with the company’s chairman, Patti Dunn, and not over “any matter relating to HP’s operations, policies or practices”, its directors had concluded that the reason for his departure did not need to be reported.
“The underlying issue here is the obligation of Federal law that is imposed on company officers” to make proper disclosures, said Viet Dinh, a lawyer for Mr Perkins. HP’s general counsel and company secretary should have concluded for themselves that a disagreement had occurred between Mr Perkins and the company, however its board of directors decided to characterise the event, he added.