Not about Studio 60
I do things other than watching television. Like watching the news on television. OK, that might not be different. However, some news stories don't fit in nice soundbytes, so I'm writing this up to understand what's going on. Somewhere, in whatever hole she's been exiled with that $21 million severance package, Carly Fiorina is laughing her ass off. What started with the corporate infighting directed against her is now resulting in HP as an example in business and law ethics courses, and a lot of her enemies in the headlines.
It all started on September 5th. Well, it all started long before that, but the public part of the scandal started on September 5th, when Newsweek published an online story about Hewlett-Packard Chairman of the Board of Directors Patricia Dunn spying on HP's Board of Directors to determine who was leaking private information that only the Board should know about to outside news organizations. At first it was by HP internal security, what they call "Global Investigations", but then it was handed over to Security Outsourcing Solutions, who farmed it out to Action Research Group. They found the leaker and the Board convened on May 18, 2005 to ask the leaker to resign. Instead, Board member Tom Perkins resigned effective immediately. He was outraged with Dunn's unethical and potentially actionable spying on her fellow Board members. HP filed an 8-K announcing Perkins' resignation but stated no reason. An 8-K is basically an immediate notice to the Securities and Exchange Commission (SEC) because it's so big it can't wait for the annual report. Usually, like in this case, it's about a change in the membership of the Board. If a Board member resigns, the 8-K should also mention why, particularly if it's over corporate policy, practices, or professional responsibility. I think the corporation spying on itself probably qualifies. It's obviously important stuff that an investor needs to know, and the 8-K serves as notice to the public, including investors. The lack of reason for Perkins' resignation, of course, was noticed, by both Perkins and the SEC. HP Board membership was permanently reduced from 11 to 10 members. Several months of lawyers flinging letters back and forth pass quietly. But then Newsweek gets it all out in the open. Well, not all of it. The name of the leaker is not identified.
The day after the Newsweek story, HP files another 8-K explaining the reasons for Perkins' resignation, including everything that Newsweek had reported. The 8-K also identified Board member Dr. George A. Keyworth II as the leaker. By the way, Keyworth is literally a nuclear scientist. He had a doctorate in nuclear physics from Duke and was Director of Physics at Los Alamos, as well as science advisor to President Ronald Reagan, so he is probably a pretty smart guy. And as a bonus kicker, the 8-K notes that the California Attorney General has launched an investigation into whether HP has committed illegal actions. This is when the wheels come off the cart.
HP and Dunn get national headlines about how she hired outside investigators and those outside investigators used pretexting. Pretexting is when person A calls a company to get person B's records, such as credit card bills, list of phone calls, or other juicy information. Person A will use the pretext of being person B. In other words, person A will lie and pretend to be person B, so naturally the company will release person B's records. Even if it may legal or extralegal, it doesn't sound legal and definitely doesn't sound moral, so HP and Dunn get quite a bit of bashing from the news and public.
The SEC is asking questions, wondering why HP was mucking around with the 8-Ks and not saying why Perkins resigned earlier, in addition to all the spying. The Department of Justice is also interested. Both the US Attorney for the Northern District of California and the FBI are making noises about criminal actions and start making inquiries. Congress is getting involved too. The U.S. House of Representatives Committee on Energy and Commerce gets in on the action. They send a "friendly" list of questions, wanting to know what the heck is going on at one of America's premiere technology companies.
Through all of this, Dunn and CEO Mike Hurd defend their conduct and actions. However, the crowd is demanding for someone's head, even though no one has been indicted yet and no criminal wrongdoing has been found. On September 12th, it was announced that Dunn was resigning as Chairman of the Board of Directors, effective January 18, 2007. Hurd would take over as Chairman and still be CEO. Dunn would continue to remain as a member of the board, so she really isn't being handed over to the crowd to be kicked and spat upon, like Mussolini's corpse. On that day also, Keyworth resigned as a member of the board, effective immediately. The 8-K doesn't have to say why he resigned, because it ain't over a disagreement with corporate policy. The membership of the board was reduced from 10 to 9 so no one replaced him.
However, it's getting worse and not better, as details start to come out about the extent of the spying and the methods used. HP's investigators were planting false documents, tailing HP Board members and journalists, staking out their homes, collecting lists of phone calls they make, and on and on. Pretty creepy stuff. They thought about planting spies posing as clerical workers and janitors in CNet and Wall Street Journal offices. HP was looking for leakers outside the Board too, including Michael Moller, Director of Corporate Media Relations, aka the spokesperson. California Attorney General Bill Lockyer is saying he's got enough to start indicting people. Kevin T. Hunsaker, Senior Counsel and Director of Ethics, concocted one particularly non-bright plan, which involved sending e-mail with spyware attached to a Cnet reporter to determine with whom she communicated. Definitely ain't good if it's your Director of Ethics is starting to resemble G. Gordon Liddy.
So that brings us to today. Hurd held a press conference. Instead of resigning on January 18th, Dunn is resigning as Chairman effectively immediately. Furthermore, she is resigning from the Board itself. The Board is permanently reduced from 9 to 8, and Hurd gets his new position and responsibilities a few months early. It wasn't announced at the press conference, but Hunsaker, the supposed ethics officer, and Anthony Gentilucci, Manager of Global Investigations (which is a really creepy title for chief security officer), have left the company (aka fired). So, is that enough heads? Depends on how much worse it gets. I also wonder if members of the Board of Directors keep leaving, will it be just narrow down to one member, and can that person be the Chairman if the Board is only one director?
Since I mentioned Watergate, I can't help but feel that there is going to be massive rewriting of guidelines and statutes regarding corporate ethics. As grand examples of retrospective thinking, the American Bar Association replaced the Model Code of Professional Responsibility with the Model Rules of Professional Conduct in response to Watergate, and Sarbanes-Oxley was passed because of Enron, Tyco, and Worldcom. Hunsaker was counsel to HP. So were Ann Baskins and Larry Sonisini. In one way or another, each initiated, planned, oversaw, authorized, or reviewed all the crazy goings-on. Of course, they have all lawyered up, which is a good thing, because they're getting interrogated by Congress on September 28th. They might not be able to hide behind attorney-client privilege. Attorney-client privilege is based in common law and various states and professional responsibility codes, but Congress might trump all that. Still, for the sake of my future income, if you are ever in a hint of trouble, get a lawyer.
I'm wondering how long Hurd will keep his position. Many people are asking what did Hurd know and when did he know it. The California AG is saying he hasn't got anything on Hurd yet, but given that Hurd approved the spyware plan, there's a high probability something will turn up. Stockholders are seriously questioning if Hurd should be Chairman and CEO, or if HP needs a clean slate. He's in a double bind. If he does knows something, then he didn't do anything, and should get booted. If he takes the Ken Lay defense that he didn't know anything, then he's an incompetent CEO, who didn't know about something that could be disastrous for his company, and he should still get booted. This is starting to resemble the debacle that is San Diego city government, where Mayor Dick Murphy resigned, but Acting Mayor Michael Zuccet had to resign three days later, because he was convicted in the stripclub bribery scandal, so City Councilmember Toni Atkins became Acting Mayor, until a real Mayor was elected a few months later.
I also wonder if other companies use similar tactics. After all, there was Apple suing bloggers, (Apple v. Does, O'Grady v. Superior Court, Apple v. DePlume, etc.) to get them to give up who was leaking information to them. Apple certainly does have a few bucks to spend on investigators in addition to lawyers. So do Sony, Dell, and Cisco to name a few. If I was being particularly catty, I would say HP was just following the lead of the federal government.
So that's the story so far, as I understand it. Or all that I have for, since I just bought Newsradio Seasons 1 and 2, 3, and 4 for $15 each. For some reason, Costco had each set $10 off. Four seasons of Newsradio is a lot of television to watch.
It all started on September 5th. Well, it all started long before that, but the public part of the scandal started on September 5th, when Newsweek published an online story about Hewlett-Packard Chairman of the Board of Directors Patricia Dunn spying on HP's Board of Directors to determine who was leaking private information that only the Board should know about to outside news organizations. At first it was by HP internal security, what they call "Global Investigations", but then it was handed over to Security Outsourcing Solutions, who farmed it out to Action Research Group. They found the leaker and the Board convened on May 18, 2005 to ask the leaker to resign. Instead, Board member Tom Perkins resigned effective immediately. He was outraged with Dunn's unethical and potentially actionable spying on her fellow Board members. HP filed an 8-K announcing Perkins' resignation but stated no reason. An 8-K is basically an immediate notice to the Securities and Exchange Commission (SEC) because it's so big it can't wait for the annual report. Usually, like in this case, it's about a change in the membership of the Board. If a Board member resigns, the 8-K should also mention why, particularly if it's over corporate policy, practices, or professional responsibility. I think the corporation spying on itself probably qualifies. It's obviously important stuff that an investor needs to know, and the 8-K serves as notice to the public, including investors. The lack of reason for Perkins' resignation, of course, was noticed, by both Perkins and the SEC. HP Board membership was permanently reduced from 11 to 10 members. Several months of lawyers flinging letters back and forth pass quietly. But then Newsweek gets it all out in the open. Well, not all of it. The name of the leaker is not identified.
The day after the Newsweek story, HP files another 8-K explaining the reasons for Perkins' resignation, including everything that Newsweek had reported. The 8-K also identified Board member Dr. George A. Keyworth II as the leaker. By the way, Keyworth is literally a nuclear scientist. He had a doctorate in nuclear physics from Duke and was Director of Physics at Los Alamos, as well as science advisor to President Ronald Reagan, so he is probably a pretty smart guy. And as a bonus kicker, the 8-K notes that the California Attorney General has launched an investigation into whether HP has committed illegal actions. This is when the wheels come off the cart.
HP and Dunn get national headlines about how she hired outside investigators and those outside investigators used pretexting. Pretexting is when person A calls a company to get person B's records, such as credit card bills, list of phone calls, or other juicy information. Person A will use the pretext of being person B. In other words, person A will lie and pretend to be person B, so naturally the company will release person B's records. Even if it may legal or extralegal, it doesn't sound legal and definitely doesn't sound moral, so HP and Dunn get quite a bit of bashing from the news and public.
The SEC is asking questions, wondering why HP was mucking around with the 8-Ks and not saying why Perkins resigned earlier, in addition to all the spying. The Department of Justice is also interested. Both the US Attorney for the Northern District of California and the FBI are making noises about criminal actions and start making inquiries. Congress is getting involved too. The U.S. House of Representatives Committee on Energy and Commerce gets in on the action. They send a "friendly" list of questions, wanting to know what the heck is going on at one of America's premiere technology companies.
Through all of this, Dunn and CEO Mike Hurd defend their conduct and actions. However, the crowd is demanding for someone's head, even though no one has been indicted yet and no criminal wrongdoing has been found. On September 12th, it was announced that Dunn was resigning as Chairman of the Board of Directors, effective January 18, 2007. Hurd would take over as Chairman and still be CEO. Dunn would continue to remain as a member of the board, so she really isn't being handed over to the crowd to be kicked and spat upon, like Mussolini's corpse. On that day also, Keyworth resigned as a member of the board, effective immediately. The 8-K doesn't have to say why he resigned, because it ain't over a disagreement with corporate policy. The membership of the board was reduced from 10 to 9 so no one replaced him.
However, it's getting worse and not better, as details start to come out about the extent of the spying and the methods used. HP's investigators were planting false documents, tailing HP Board members and journalists, staking out their homes, collecting lists of phone calls they make, and on and on. Pretty creepy stuff. They thought about planting spies posing as clerical workers and janitors in CNet and Wall Street Journal offices. HP was looking for leakers outside the Board too, including Michael Moller, Director of Corporate Media Relations, aka the spokesperson. California Attorney General Bill Lockyer is saying he's got enough to start indicting people. Kevin T. Hunsaker, Senior Counsel and Director of Ethics, concocted one particularly non-bright plan, which involved sending e-mail with spyware attached to a Cnet reporter to determine with whom she communicated. Definitely ain't good if it's your Director of Ethics is starting to resemble G. Gordon Liddy.
So that brings us to today. Hurd held a press conference. Instead of resigning on January 18th, Dunn is resigning as Chairman effectively immediately. Furthermore, she is resigning from the Board itself. The Board is permanently reduced from 9 to 8, and Hurd gets his new position and responsibilities a few months early. It wasn't announced at the press conference, but Hunsaker, the supposed ethics officer, and Anthony Gentilucci, Manager of Global Investigations (which is a really creepy title for chief security officer), have left the company (aka fired). So, is that enough heads? Depends on how much worse it gets. I also wonder if members of the Board of Directors keep leaving, will it be just narrow down to one member, and can that person be the Chairman if the Board is only one director?
Since I mentioned Watergate, I can't help but feel that there is going to be massive rewriting of guidelines and statutes regarding corporate ethics. As grand examples of retrospective thinking, the American Bar Association replaced the Model Code of Professional Responsibility with the Model Rules of Professional Conduct in response to Watergate, and Sarbanes-Oxley was passed because of Enron, Tyco, and Worldcom. Hunsaker was counsel to HP. So were Ann Baskins and Larry Sonisini. In one way or another, each initiated, planned, oversaw, authorized, or reviewed all the crazy goings-on. Of course, they have all lawyered up, which is a good thing, because they're getting interrogated by Congress on September 28th. They might not be able to hide behind attorney-client privilege. Attorney-client privilege is based in common law and various states and professional responsibility codes, but Congress might trump all that. Still, for the sake of my future income, if you are ever in a hint of trouble, get a lawyer.
I'm wondering how long Hurd will keep his position. Many people are asking what did Hurd know and when did he know it. The California AG is saying he hasn't got anything on Hurd yet, but given that Hurd approved the spyware plan, there's a high probability something will turn up. Stockholders are seriously questioning if Hurd should be Chairman and CEO, or if HP needs a clean slate. He's in a double bind. If he does knows something, then he didn't do anything, and should get booted. If he takes the Ken Lay defense that he didn't know anything, then he's an incompetent CEO, who didn't know about something that could be disastrous for his company, and he should still get booted. This is starting to resemble the debacle that is San Diego city government, where Mayor Dick Murphy resigned, but Acting Mayor Michael Zuccet had to resign three days later, because he was convicted in the stripclub bribery scandal, so City Councilmember Toni Atkins became Acting Mayor, until a real Mayor was elected a few months later.
I also wonder if other companies use similar tactics. After all, there was Apple suing bloggers, (Apple v. Does, O'Grady v. Superior Court, Apple v. DePlume, etc.) to get them to give up who was leaking information to them. Apple certainly does have a few bucks to spend on investigators in addition to lawyers. So do Sony, Dell, and Cisco to name a few. If I was being particularly catty, I would say HP was just following the lead of the federal government.
So that's the story so far, as I understand it. Or all that I have for, since I just bought Newsradio Seasons 1 and 2, 3, and 4 for $15 each. For some reason, Costco had each set $10 off. Four seasons of Newsradio is a lot of television to watch.
posted by Pettifogger | 9:10 PM
0 Comments:
Post a Comment
<< Home