The most recent case of not only adherence to the letter of the law but also to the spirit of the law has been HP’s experience with privacy and corporate investigations. In one of the odder examples of corporate intelligence gathering and SEC reporting gone bad is former HP Chairwoman Patricia Dunn’s foray into investigations and fact gathering. In an attempt to ferret out who on the HP board was possibly leaking information to the press, Dunn initiated an investigation that ultimately relied on an outside vendor to gather incriminating evidence uncovering potential leaks. Unfortunately for Dunn, and ultimately for HP, the methods used during the investigation relied on practices of debatable legality on both the state and federal levels. To compound issues reporting mechanisms put in place by the Securities and Exchange Commission (SEC) were arguably breached when HP reported (as obligated) changes in its board structure. To be fair, it should be noted the HP’s stock price has remained until now rather untouched and unmoved by the hint of scandal. However, like Sony before it, the lessons of compliance and adherence in all legal and ethical matters on the corporate level are being reexamined by many other companies that wish to avoid future embarrassment.
The facts of the case are fairly straightforward. During a mid-May Board meeting Dunn revealed to the Board that an investigation of which Board member had been leaking information to the press had finally reached a conclusion and named the suspect: HP Director George Keyworth. She demanded his resignation which Keyworth refused to do. However, Tom Perkins, another Board member, reportedly was so irate at Dunn’s methods that he quit his position and left the meeting. HP reported Perkins’ resignation the next day both publicly and later in filings required of it per SEC requirements. Although somewhat seedy, similar situations occur within corporations frequently and the matter was left at that since May.