HP’s Board Now Leaking About Leaks

You had to know this was going to happen. HP boardmembers are now leaking to the media about the board meeting yesterday about leaks on the board. Whew, got all that? We’re soon going to need a metaphysics professor to help keep this stuff straight.

One insider says there are three HP directors, however, who feel that Dunn’s investigation never should have been a high priority, and who lay the blame for the “pretexting” of directors’ and business journalists’ phone records (including those of the author and two other Business Week reporters) squarely with Dunn. This group includes George “Jay” Keyworth, who was identified through phone records as the source of the leaks and will not be on the slate for reelection in 2007, as well as director Lucy Salhany, and former HP executive and long-time director Richard A. “Dick” Hackborn.

In the hours that she has left as chair, I wonder if Ms. Dunn will order up some phone taps, or maybe a little water-boarding, to get the bottom of the leaks about the leaks?


  1. Paul Kedrosky – I for one supported Dunn’s actions as a much needed attempt to “clean house”. If you read the following article by Carol Loomis of Fortune Magazine, How the HP Board KO’d Carly – March 7, 2005 you will realize that leaks from within HP’s Board of Directors have been an ongoing problem and were addressed in a Board meeting last year with all members agreeing not to talk to the press. The fact that leaks occurred after this meeting indicates that one or more Board Members are guilty of nothing less than corporate espionage which is illegal.
    Leaks occur for a variety of reasons but the two most compelling reasons need to be:
    1.) The manipulation of information to positively or negatively impact share prices to create personal financial opportunity.
    2.) A political motive based on strategy disagreements between Board members.
    In either case it is obvious that confidential information being leaked to the press which compromises a company’s ability to secure ever-greater market share through viable long-term strategies is nothing less than corporate espionage.
    I can not believe that Tom Perkins can so easily mount that “high-horse’ he currently sits on having engaged in “leaking” confidential information to the press (Fortune Magazine and WSJ – 2005) about Carly Fiorina and her being stripped of her responsibilities last year. Other Board Members who need to be removed are Richard Hackborn (he was in attendance at the meeting in which Fiorina was read the “riot act” by Dunn) and of course the totally unethical George Keyworth (who may have been the principle in all of the HP leaks – his stepping down today is a big step in the right direction).
    In my personal opinion both Perkins and Keyworth are corporate spies and do not have the best interests of the shareholders or the company as a priority. Dunn did nothing wrong in ferreting out the perpetrators of this corporate espionage. In fact, as the Chairman of the Board she would be charged with plugging the leak. It might be of interest to know that the District Attorney’s office uses Private Investigators to obtain information necessary to their cases. Pre-texting is not illegal and has been a recognized tool in the Private Investigation Industry for decades.
    Perkins demonstrating the “panties-in-a-bunch” outrage at Dunn by resigning his directorship was an attempt to cover his friend Keyworth’s and his own prior and possibly current unethical behavior. His demonstration could be considered laughable in that he is outraged by the invasion of his personal privacy and so unconcerned about his role in a lack of corporate confidentiality, if it were not such a serious breach of business ethics. This man needs to “go away”.
    As a journalist, you believe that “leaks” are the lifeblood of sensational stories and I would be hard pressed to disagree with you on that point. As a stockholder of HP, however, I can not support a Board Member leaking confidential information to the press as being less than “high priority” as stated by the three Board Members. I would go so far as to suggest that such leaks be investigated by the SEC for possible stock price manipulation, especially if it was discovered that the Board Member bought or sold shares of the company just prior to or within 30 days of such a leak. Leaks of long-term corporate strategies unfairly arms competitors with an advantage and cannot be seen by anyone as being in the best interest of the company or the shareholder.

  2. WRB,
    What leaks are you talking about? There were no leaks of confidential information. Only a guy being excited an passionate about HP talking up the company to the media when they called him.
    The biggest lesson I’ve learned from this is that corporate governance pundits and academics are clueless about right and wrong. Many should be ashamed of themselves for suggesting that it was okay to break the law to catch a leaker who didn’t even leak anything that wasn’t already in the public domain.
    Here’s something I wrote yesterday on this topic:
    Amid the media storm over Hewlett-Packard’s spying scandal, corporate governance pundits like Nell Minow of the Corporate Library and Rick Steinberg of Steinberg Governance Advisors, Inc. say the media has overlooked the fact that an HP director leaked information. Both say this is a serious harm to companies and their boards.
    However, that is only true if the information given to reporters was confidential. In the HP case, former director George Keyworth has apparently admitted to speaking to the CNET News.com website, but he initially refused to resign. A review of the original CNET News.com article which sparked HP’s notorious probe may provide insight into why Hayworth refused to step down after admitting he spoke to reporters. The article contains no more information than had already been disclosed by the company or reported by the media.
    Indeed, shortly before the article ran, HP itself provided a wide range of information about the company’s strategy to investment analysts at the company’s major annual analyst day meeting on December 13, 2005 at which CEO Mark Hurd and five other senior executives gave analysts a complete overview of the company’s strategy. That was about three weeks before the board session in early January 2006.
    In the CNET article, an anonymous source (presumed to be Hayworth) mostly reiterated what was already contained in the HP analyst day presentations.
    Other information in the article was neither new nor meaningful. For example, the article said HP was frustrated with delays from Intel and planned to use more chips from its competitor, AMD. However, the Intel problems were not new. HP was being publicly attacked by Sun Microsystems at least two months earlier over the Intel Itanium chip delays. In November 2005, Sun issued a so-called ‘reality-check’ to clients about the issue.
    Directors cannot reasonably be gagged from ever speaking about their companies to outsiders. Indeed, they can be valuable assets as ambassadors for the companies they help govern.

  3. Dominic – I’m confused! Why on earth would Dunn launch an investigation on Board Members for leaking information which was already in the public domain?
    Why would CNET refer to Hayworth as an anonymous source if he didn’t reveal any information which was not already in the public domain?
    If it was discussed in a Board Meeting last year and agreed to by all Board Members why would Keyworth discuss anything with the press other than totally benign information?
    If all he discussed with the media was information which had already been disseminated by the company, why would Dunn launch an investigation?
    If you were Dunn would you launch an investigation to reveal the source of information leaks based on Board Members reiterating information which had already been publicly announced? I don’t think so. I don’t believe Dunn did either.
    The members of the Board of Directors are a very powerful bunch and to haphazardly launch an investigation on information leaks (especially information which was announced publicly) to defame and expose a Board Member for doing nothing more than confirming pre-released company information would be ludicrous as is your suggestion that this is what happened.
    Given Ms. Dunn’s experience as a member of several different Boards this explanation makes no sense at all. Critical information leaks were occurring and the source of those leaks was the very body which had access to the most sensitive company information. It was her responsibility to expose the leak and plug it!
    I do agree with you that Directors can function as Ambassadors for their respective companies and should certainly sing the company praises. I don’t think Dunn investigated the Board Members because the were singing HP praises or functioning as Ambassadors.

  4. WRB,
    No idea for sure, but it seems to me a result of being overly focused on process. It wasn’t about the substance of what was said to the reporter, as much as the fact that someone had spoken without checking first with the PR department or her (Dunn). Someone spoke to the press, they appeared to be a director and she was going to find out who?
    Oddly enough, Keyworth apparently was never asked directly if it was him. It seems he didn’t understand that there was a problem with him speaking to CNET, as the company had repeatedly asked him to talk with reporters in the past.
    He actually did a good job from a PR perspective. The entire article on CNET focused on HP. It’s not easy to get that kind of publicity.
    Oh, and as an aside, the stock went up in the two days after the article appeared. Not that I’m making any connection.