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CA AG on HP: I have enough to prosecute - Updated - Reactions
Tuesday, September 12 2006 @ 08:50 PM EDT

The San Francisco Chronicle has the news:
In a related development, highlighting the potential legal problems faced by HP, California Attorney General Bill Lockyer's office has enough evidence to indict individuals within HP and in agencies hired by the company for its internal probe.

"I have enough evidence to prosecute people in the firm and on the outside," Lockyer said in an interview.

That implies that the data brokers were not, in his view, acting without authorization or some cooperation from within HP. And he said people, not an individual, within HP. Stay tuned.

Update: The Washington Post has more:

"We currently have sufficient evidence to indict people both within HP as well as contractors on the outside," Lockyer said on PBS's NewsHour with Jim Lehrer.

"Crimes have been committed," Lockyer said. "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."

Reactions are coming in now, and it's not looking good for HP. Many are expressing that HP pretty much flunked a no-brainer.

A sample:

  • "H-P Shuffle, a Step Back For Corporate Reform," Alan Murray, Wall St. Journal: "In the past week, Ms. Dunn became the scapegoat for H-P's problems. That's not entirely fair. ... She didn't oversee the investigation herself; that was done by the company. Blame falls as much on the doorstep of Chief Executive Mark Hurd and General Counsel Ann Baskins as it does on Ms. Dunn's. Moreover, no one -- not Ms. Dunn, Mr. Hurd, Ms. Baskins or any other director -- seems to have raised serious questions about how investigators managed to obtain private phone records. They all shared a blind spot on that point."

  • Mike Langberg, Mercury News: "Hewlett-Packard and its directors took an ineffective half-step Tuesday toward resolving the spying scandal at Silicon Valley's largest company....It's not enough."

  • Financial Times: "The Hewlett-Packard board has opted for an unsatisfactory fudge....It is not satisfactory. If the incident is important enough for Ms Dunn to step down, it requires a full internal inquiry. She cannot lead that. More importantly, she is not the right person to clean up the mess from an external perspective."

  • Ashlee Vance, The Register: "Over the past eight years, HP has proved a geyser of leaked information to the press. We're talking juicy stuff here - not product details and ink prices but serious boardroom dirt. All HP could muster in the pre-Hurd era to deal with the leaks was a semi-formal investigation that included chit-chats with executives. Post-Hurd, however, we discover a much more aggressive HP - one willing to fund the machinations of two investigative firms. So, did Dunn really snap, as we're told, because of a CNET story stating that HP's directors needed a rest after lengthy meetings or did Hurd snap during week one when he took over as CEO? Was it the new guy that changed HP's investigative protocol or the director that hadn't done too much about leaks in the past?"

  • "HP's blow against corporate trust", Jonathan Weber, Times Online: "Yet what I found most remarkable in the whole thing was not simply the poor judgement of a whole bunch of people who are paid huge sums not to have poor judgement. It's the fact that even in the aftermath, most of these people miss the point: the things you have to do to find the source of a leak are almost inevitably more damaging than the leaks themselves....I'm sure there is a lot at play in the HP situation that we don't know about, but it seems elementary that covert investigations are not going to lead to a restoration of trust in almost any situation. Shame on the leaders of H-P, and all their high-priced lawyers and consultants, for not understanding that simple bit of ethics and common sense."

  • HP's Watergate: common sense and corporate governance didn't compute, Stephen Ellis, The Australian: TO a casual observer, the recent behaviour of Hewlett-Packard's outgoing chairwoman, Patricia Dunn, may look a little like the final days of Richard Nixon's presidency, just as the tactics of investigators she hired to probe board-level leaks to the press resemble Watergate.

    As the scandal of the past few weeks broke, Dunn and HP's others leaders reacted with the reflexive denial of a large corporation with a lot to hide...In the end, there is no defence for Dunn (or other HP directors, or the firm's house lawyers, for that matter) for not wondering and asking, when presented with evidence of leaks based on private phone records, just how those records had been obtained.

  • HP's chair strategy seems a bit wobbly, David Lazarus, SFGate.com: If your kid sets the house on fire, you don't just tell her to stop playing with matches. But business ethicists say that's essentially what Hewlett-Packard told Patricia Dunn on Tuesday when it announced that she'd no longer serve as the company's chairwoman after January but would remain as a board member.

However, Bloomberg reports that Hurd and Dunn made a joint appearance on video at HP, to speak to employees. Dunn apologized, saying she was deeply sorry, and Hurd made the following statement: "This situation is not indicative of how we conduct business at Hewlett-Packard," Hurd said. "This is an anomaly and I commit to you that it will be fixed."

And the LA Times has more detail on the Attorney General Bill Lockyer's remarks, including the news that criminal charges could be filed as early as next week. He's talking about three statutes having been violated, no longer only two:

Lockyer said the deception in the Hewlett-Packard case violated three state laws. One bars obtaining utility records illegally, another bars "unauthorized use of personal identifying information," or identity theft, and the third covers "unauthorized use of data" -- a law more commonly applied to computer hackers.

I took a look at California's Penal Code, and I think this might be the statute he is referring to, California Penal Code Section 538.5:

Every person who transmits or causes to be transmitted by means of wire, radio or television communication any words, sounds, writings, signs, signals, or pictures for the purpose of furthering or executing a scheme or artifice to obtain, from a public utility, confidential, privileged, or proprietary information, trade secrets, trade lists, customer records, billing records, customer credit data, or accounting data by means of false or fraudulent pretenses, representations, personations, or promises is guilty of an offense punishable by imprisonment in the state prison, or by imprisonment in the county jail not exceeding one year.


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