Watching You Watching You Watching You
Hewlett Packard takes us back to 1981 with the recent revelations that they hired private eyes (clap clap), to watch their board -- they saw their every move. (It is totally time for the Hall and Oates revival to begin! They made our dreams come true!)
So this all started back in 1999, when former CEO Carly Fiorina moved forward with her controversial plan for HP to acquire Compaq, despite strong board opposition. After the deal went through, you may also recall that HP ended up having to lay off 18,000 people and its stock nosedived.
In reaction to this, board member George Keyworth (a science advisor to Ronald Reagan) started pushing for the big time VC Tony Perkins of Kleiner Perkins to be put back on the board, despite Fiorina's objections. Perkins then sat in on a gripey board meeting in January 2005 where everyone talked about how much they hated Fiorina, and afterwards, everyone claimed to feel better.
Shortly afterwards, though, someone leaked the details of the purportedly-secret Fiorina hatefest to the Wall Street Journal, and in February 2005, Fiorina got canned and Perkins got reinvited to the board. They then appointed Patricia Dunn as the new board chair. Here's where it gets crazy.
Before Fiorina got the boot, she'd asked her lawyer, Silicon Valley's lawyer to the stars Larry Sonsini, to find out who was spreading all these rumors about her. Sonsini questioned everyone but found out nothing.
Once Dunn took over the board chair position, she decided to continue the investigation, and told the HP legal department to handle it. The HP legal department subcontracted the job out to a private investigations firm.
The PI firm, it turns out, managed to figure out the board members' social security numbers, then called up various phone companies pretending to be the board members, in a tactic known as "pretexting," and got access to the board members' phone records, as well as a number of reporters'. From there, it was an easy slam dunk to figure out that George Keyworth had been yapping away to CNet and the Wall Street Journal. (You can sort of tell in the coverage that the Chron and the Mercury News are a little hurt that Keyworth didn't think they were significant enough to leak to.)
Based on this information, HP then decided not to ask Keyworth to return to the board. At this point, Perkins got all upset, resigned the board in protest, and said he was going to call the authorities to investigate whether or not HP's tactics had been illegal. HP was then forced to tell the SEC what they'd done, and here we are today.
Attorney General Bill Lockyer has said he's going to investigate, and people are now calling for Dunn to resign. Dunn says she's not going to until someone makes her, and her supporters are saying that Keyworth shouldn't have been talking in the first place.
All this corporate intrigue! It makes our head hurt. We're going back to the Hall and Oates YouTube collections now.