[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
HEWLETT-PACKARD'S PRETEXTING SCANDAL
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND
COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
SEPTEMBER 28, 2006
Serial No. 109-146
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
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COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, JR., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. "CHIP" PICKERING, Mississippi ALBERT R. WYNN, Maryland
Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DEGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. "BUTCH" OTTER, Idaho MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
BUD ALBRIGHT, Staff Director
DAVID CAVICKE, General Counsel
REID P. F. STUNTZ, Minority Staff Director and Chief Counsel
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
ED WHITFIELD, Kentucky, Chairman
CLIFF STEARNS, Florida JOE BARTON, Texas
CHARLES W. "CHIP" (EX OFFICIO)
PICKERING, Mississippi BART STUPAK, Michigan
CHARLES F. BASS, New Hampshire Ranking Member
GREG WALDEN, Oregon DIANA DEGETTE, Colorado
MIKE FERGUSON, New Jersey JAN SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas JAY INSLEE, Washington
MARSHA BLACKBURN, Tennessee TAMMY BALDWIN, Wisconsin
HENRY A. WAXMAN, California
JOHN D. DINGELL, Michigan
(EX OFFICIO)
CONTENTS
Page
Testimony of:
Dunn, Patricia, Former Chairman of the Board, Hewlett-
Packard Company 44
Sonsini, Esq., Larry W., Chairman, Wilson Sonsini
Goodrich & Rosati 78
Adler, Fred, IT Security Investigations, Hewlett-Packard
Company 80
Hurd, Mark, President, Chief Executive Officer, and
Chairman of the Board, Hewlett-Packard Company 731
Additional material submitted for the record:
Hurd, Mark, President, Chief Executive Officer, and
Chairman of the Board, Hewlett-Packard Company,
response for the record of 766
HEWLETT-PACKARD'S
PRETEXTING SCANDAL
THURSDAY, SEPTEMBER 28 2006
HOUSE OF REPRESENTATIVES,
COMMITTEE ON ENERGY AND COMMERCE,
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:06 a.m., in
Room 2123 of the Rayburn House Office Building, Hon. Ed
Whitfield [Chairman] presiding.
Present: Representatives Whitfield, Stearns, Bass, Walden,
Burgess, Blackburn, Barton (ex officio), DeGette, Schakowsky,
Inslee, Baldwin, and Dingell (ex officio).
Staff Present: Mark Paoletta, Chief Counsel for Oversight and
Investigations; Thomas Feddo, Counsel; Andrew Snowdon,
Counsel; Krista Carpenter, Counsel; Peter Spencer, Professional
Staff Member; John Halliwell, Policy Coordinator; Clayton
Matheson, Analyst; Ryan Ambrose, Legislative Clerk; Matthew
Johnson, Legislative Clerk; Chris Knauer, Minority Investigator;
Consuela Washington, Minority Senior Counsel; and Chris
Treanor, Minority Staff Assistant.
MR. WHITFIELD. Today, the Subcommittee on Oversight and
Investigations will examine how and why Hewlett-Packard
Company, one of America's largest technology companies, used
pretexting and other nefarious practices as part of an internal
corporate investigation.
This subcommittee has been examining the practice of
pretexting for the past 8 months. To be clear, pretexting means
using fraud, deceit and impersonation to acquire someone's
personal records without his or her consent. The relative ease with
which unscrupulous pretexters can obtain private information is
cause for great concern.
During our hearings we heard testimony from witnesses who
were unsettlingly proficient in obtaining personal information
regarding phone calls, bank accounts, credit card charges and other
information without the consent of the person whose information
they obtained.
We also discovered that pretexting is commonly used for
investigation purposes as well as for the purposes of identity theft,
and we heard testimony how it was used frequently by the national
news media.
Hewlett-Packard has long been one of the most admired
companies in America. Consequently, people were really shocked
to learn that a company of this stature would resort to such tactics
in an effort to identify the source of Boardroom leaks. Pretexting
for phone records, physical surveillance, monitoring of e-mail were
all part of the plan. HP's investigative team even tried to plant or
discuss planting electronic tracing software into a reporter's e-mail
account and even considered planting undercover spies in several
newsrooms.
While there is nothing objectionable on its face about
Hewlett-Packard trying to determine the source of leaked
confidential information, the methods used were clearly
unacceptable. Obtaining private call records by pretexting is an
invasion of privacy and probably is illegal.
For over a year, the most senior levels of management at the
company were designing and directing the investigation. This isn't
a case of some out-of-control and overzealous contractor who was
hired to conduct a search for a leaker. Rather, this investigation
was led by the Chairman of the Board Patricia Dunn; the
company's Senior Legal Counsel Ann Baskins; and the day-to-day
operations were overseen by, of all people, the company's chief
ethics lawyer Kevin Hunsaker.
We hope to get a better understanding today why no one
among this group of very smart and experienced people had the
good sense and courage to say, stop, this may be illegal, and at the
very least it is not the way we should be doing business. And how,
after all was said and done, could the Board's outside counsel,
Mr. Larry Sonsini, review the investigation and say that pretexting
for phone records of Board members, employees and journalists
was above board and legitimate?
Further, I give little credence to the argument that HP was
unaware that its outside consultants were inappropriately gaining
access to confidential telephone records. If there are legitimate
ways to obtain someone's private records without their consent,
short of a subpoena, I would be interested in knowing what they
are. Our hearings this past June demonstrated that there are really
none, and testimony from the FBI suggested that the Federal Wire
Act may be implicated by pretexting. It is the company's
responsibility to know what those operating on its behalf are doing
and how they are doing it.
If you turn to the first page of the Hewlett-Packard Standards
of Business Conduct, it reads, "Hewlett-Packard conducts its
business with uncompromising integrity. Every member of the
Hewlett-Packard community, directors, executives, managers,
employees and business partners, have a duty to comply with all
applicable law and adhere to the highest standards of business
ethics." It appears that they fell short this time.
The committee began its oversight work of the
Hewlett-Packard matter just a short time ago on September the
11th. We moved aggressively to learn as much of the facts as
possible and hold this hearing and share the information with the
American people. Our pace meant reviewing tens of thousands of
documents in very short order, and I would like to commend
Hewlett-Packard for doing everything in its power to cooperate
fully and completely with the committee's investigation on our
schedule to ensure that this hearing was productive and we had all
the information. I want to thank you for that.
[Prepared statement of Hon. Ed Whitfield follows:]
PREPARED STATEMENT OF THE HON. ED WHITFIELD, CHAIRMAN,
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
Good morning. Today the Subcommittee on Oversight and
Investigations will examine how and why Hewlett-Packard
Company, one of America's most famous corporations, used
"pretexting" and other nefarious practices as part of an internal
corporate investigation. Documents reviewed by the Committee
have revealed a series of investigations that were part Keystone
Cops, part Mission Impossible, and part All the President's Men.
Sometimes the truth really is stranger than fiction.
This Subcommittee has been examining the practice of
"pretexting" for the past eight months, and to date we have held
two hearings on this topic. To be clear what we are talking about,
pretexting, or "social engineering," means using fraud, deceit, and
impersonation to acquire someone's personal records without his
consent. In this high-tech age, personal information is not only
valuable, but vulnerable, and the relative ease with which
unscrupulous pretexters can literally con their way into our
personal lives is cause for great concern.
Lest anyone think that pretexting is limited to shady collection
agencies, private investigators, and bail bondsmen, the recently-
emerged scandal involving Hewlett-Packard proves otherwise.
But, according to an email written this past June by H-P's outside
counsel, Mr. Larry Sonsini, pretexting is "[a]pparently a common
investigatory method" and H-P's pretexting was "well done and
within legal limits." If a corporate icon like H-P can sink to this
level, then all bets are off.
Hewlett-Packard and its storied past would easily make the cut
for a corporate Hall of Fame, if there were one. Consequently, I
was absolutely shocked to learn a few weeks ago that a company
of this stature would resort to such despicable tactics in an effort to
identify the source of boardroom leaks. Pretexting for phone
records, physical surveillance, monitoring of email, and
background investigations were all part of the plan. H-P's
investigation team tried to plant electronic tracing software into a
reporter's email account, and even considered planting undercover
spies in several newsrooms.
While there is nothing objectionable on its face about H-P
trying to determine the source of leaked confidential information,
the methods used here were clearly unacceptable. Sneaking into
someone else's private calling records is a tremendous invasion of
privacy. These records provide a virtual roadmap of people's daily
lives - who they talk to, when, for how long, and even from where
they make those calls. Calling records expose business activities
and personal interactions.
What is especially puzzling to me is how nobody at H-P saw
this train wreck coming, especially H-P's General Counsel. For
over a year, the most senior levels of management at the company
were designing and directing the investigation. This isn't a case of
some out-of-control and overzealous contractor who was hired to
conduct a search for a leaker. Rather, this investigation was led by
the Chairman of the Board, Patricia Dunn, and the company's
General Counsel, Ann Baskins, and the day-to-day operations were
overseen by, of all people, the company's chief ethics lawyer,
Kevin Hunsaker.
Yet, Ms. Baskins resigned her position as General Counsel just
this morning. Mr. Hunsaker and another H-P security employee
who participated in the internal investigation, Mr. Anthony
Gentilucci, left the company just this week. Why weren't they
fired a long time ago? If I were Mr. Hurd, I would have made a
wholesale housecleaning months ago, when it became clear to the
Board and others exactly what unsavory investigative methods
were used by these H-P executives, lawyers, and employees.
The company's records show that H-P senior management -
Patricia Dunn, Ann Baskins, and Mark Hurd - were aware of the
pretexting and of the plot to "sting" a journalist. Exactly what did
they know about the use of pretexting? What did they know about
planting spyware on an email to a journalist? The records also
show that even the company's CEO, Mark Hurd, was provided
information about the results of the two main phases of the
investigation and of the email sting operation. Exactly what did
Mr. Hurd know about the methods used during the investigation,
and did he know about the electronic tracer used during the email
sting of the reporter?
I have to say, if I were a corporate executive, and my staff
came to me with the last 300 cell phone calls of the CEO of a
competitor company - say, Michael Dell's last 300 calls - I would
be incredulous, and a lot of alarm bells would go off. Why should
the spying on phone records here be any different? The
individuals at H-P who sanctioned this are very smart, high-level
managers and officers, and on many levels it is a questionable and
inadequate defense to say "the lawyers said this was okay." We
heard that unacceptable excuse with Enron, and other corporate
investigations. And even if it were legal in some sense, is it ethical
conduct?
I hope to get a better understanding today why nobody among
this group of very smart and experienced people had the good
sense and courage to say, "Stop. This may be illegal, and at the
very least it's not the way we should be doing business." And
how, after all was said and done, could the Board's outside
counsel, Larry Sonsini, review the investigation and say that
pretexting for phone records of Board members, employees, and
journalists was above board and legitimate?
Further, I give little credence to the argument that H-P was
unaware that its outside consultants were inappropriately gaining
access to confidential telephone records. If there are legitimate
ways to obtain someone else's private records without their
consent -- short of a subpoena -- I'd be interested in knowing what
they are. Our hearings this past June demonstrated that there are
none, and testimony from the FBI suggested that the Wire Act may
be implicated by pretexting. It is the company's responsibility to
know what those operating on its behalf are doing and how they
are doing it.
I intend to get to the bottom of Hewlett-Packard's widely
publicized pretexting scandal today, and I thank all of the
witnesses for appearing. Perhaps by shedding some light on H-P's
conduct, we can discourage other companies from utilizing such
unconscionable practices in the future. I also hope this provides
some momentum for the Congress to pass this Committee's
legislation, H.R. 4943, and make pretexting for phone records
explicitly illegal.
I now recognize the Ranking Member of the Subcommittee,
Mr. Stupak.
MR. WHITFIELD. At this time I would like to recognize the
Ranking Minority Member, Ms. DeGette of Colorado, for her
opening statement.
MS. DEGETTE. Thank you very much, Mr. Chairman. And,
Mr. Chairman, I bring Mr. Stupak's apologies for not being here.
He is at a funeral today.
I would also ask unanimous consent to put my full statement
and the statements of Mr. Stupak and other committee members in
the record.
MR. WHITFIELD. Without objection.
MS. DEGETTE. Thank you so much, Mr. Chairman.
Mr. Chairman, over the last few years this committee has
looked at major corporate scandals in this country, like Enron and
WorldCom. I was privileged to serve on this committee during
those hearings as we helped shine a light on corporate excess and
pave the way to reform.
One thing I felt at the end of the first series of hearings was that
we left issues of Board accountability on the table. And I think it
is important as today we continue this committee's oversight role
in looking at issues of corporate accountability, and in particular
board accountability.
Today, as we continue our series of hearings on pretexting, this
time in the corporate context, this gives us a good opportunity to
open the window for some of the practices that are going on in
corporations around the country.
The corporate context of pretexting that we are talking about
today, of course, involves Hewlett-Packard. It is a sad day for this
proud company, and I have been sad to see all the witnesses, the
fine corporate representatives who one by one have announced
their intentions to exercise their Fifth Amendment rights, although
I have got to say, given the facts, I don't blame them.
HP is a company of iconic status in the U.S. and around the
world, and frankly, looking around this committee room, Mr.
Chairman, there are many products that we are using today that
bear the HP logo. This company was started in a small garage in
Silicon Valley and grew to be one of the Nation's largest
employers. So we know how proud so many are about what
Hewlett-Packard became over the years.
But something has really gone wrong at this institution, and
one of the questions I want to ask today is is it just with this
institution, or is it endemic through corporate America that the
kinds of excesses that we will hear about and that we have seen in
the voluminous documents and interviews are going on throughout
corporate America?
Mr. Chairman, this hearing really is about more than sorting
through the mess that has sullied Hewlett-Packard. It is more than
about how the Hewlett-Packard way became synonymous with
digging through people's trash, setting up bogus e-mails which
were approved at the highest levels of the company, and stinging
unsuspecting reporters. And it is more than about how a computer
company suddenly found itself in the business of trailing and
photographing board members across the globe, or surveilling
journalists using ex-FBI agents who sat in cars and watched as if
their subjects were busy making truck bombs.
As I reviewed all of the documents for this hearing today, I felt
like I was looking at a proposal for a made-for-TV movie. And
maybe this will be a made-for-TV movie, but I think it is awfully,
awfully sad.
What this hearing is really about is sorting through a dark
chapter of corporate governance so that shareholders and the
employees themselves can look and see is this the kind of
corporate practice that we believe in in this country?
Understanding what happened here hasn't been easy. As you
said, Mr. Chairman, our staffs have reviewed thousands of
documents and interviewed many witnesses in a short period of
time. But we have been able to formulate some key questions.
Why were such marginal methods used in this investigation? Who
approved them? And who knew about them, and when? Have
these tactics been used before, and, if so, where? And will they
ever be used again at Hewlett-Packard? I think I know the answer
to that already. What assurances can the company give that
protections are in place so they will not be used? And for those
that did approve them, what was the justification? And did they
believe that that approval showed good judgment? And finally,
where were the legal and ethical guardians of HP's corporate
interests when all of this was happening, and whose job was it to
steer this ship clear of the icebergs?
For example, was it not a red flag when discussions were
occurring about fraud and deception to obtain third-party phone
records from journalists? Was it not a red flag when discussions
were broached about even the possibility of placing janitors or fake
employees in news organizations like the Wall Street Journal or
CNET to engage in spying? Was it not a red flag when covert
photographers were photographing board members or tracking
their wives to Bingo parlors or reporters to their children's
schools?
I am very concerned, Mr. Chairman, about the judgment that
went into these decisions, and I am concerned more about whether
this is just an accepted practice throughout corporate America.
Finally, I am just as concerned about who made--about other
people who may have known about these things and didn't say no.
I don't understand how the entire Board of Directors, all of them
potential targets of this spy ring, the CEO or the general counsel
saw or knew so little when so much was going on.
Finally, Mr. Chairman--and I will finish. We passed a bill on
pretexting out of this committee last spring. We passed this bill on
a unanimous bipartisan basis and sent it to the floor. It was
scheduled for a vote on May 2nd of this year, where it apparently
fell into a black hole. I think that these practices, which we now
all agree--the pretexting which were illegal need to be stopped, and
Congress needs to send a clear message. That message is we need
to pass our pretexting legislation.
Thank you very much, Mr. Chairman.
MR. WHITFIELD. Thank you, Ms. DeGette.
[The prepared statement of Hon. Diana DeGette follows:]
PREPARED STATEMENT OF THE HON. DIANA DEGETTE, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO
MR. WHITFIELD. The Chair recognizes Mr. Walden for his
opening statement.
MR. WALDEN. Thank you very much, Mr. Chairman. I
appreciate the work that you have put into this and that our
committee staff has put into this as well.
This is a most troubling day, as you can tell, for all of us in this
room, certainly for you at Hewlett-Packard, in terms of what went
on and what we now know and what we may learn today. It is
troubling for, I think, all of us as Americans to know that this
practice goes on all across this country.
And if this practice were so simply described as legal, then I
ask you why are so many witnesses today either going to take the
Fifth Amendment or have quit their jobs?
Clearly when the spotlight of public scrutiny is put to bear on
this practice, it is obvious that nobody believes this is right, and I
think that is the fundamental question here. For those who said
conveniently, well, we are told it is legal, so it must be okay, where
was somebody to say this just isn't right? Somewhere some adult
should have stepped forward and said, stop this, this isn't right.
Planting spies in newsrooms? I have a journalism degree. I
can't imagine in a newsroom having spies planted there to find out
who might be leaking. Setting up e-mail spyware, tracking down
who calls whom from their private cell phone or their home
phone?
This is not about law, this is about ethics and, I think, morality.
I just find it horribly offensive and outrageous conduct, I really do.
I spent 5 years on a community bank board, 5 years on a hospital
board, I have been a small business owner for 20 years. I
understand the importance of keeping proprietary information
proprietary, but to go to this level to try and find out who might be
leaking something, there is no excuse for it. There just isn't.
I agree with my colleagues on this committee. We have a fine
piece of legislation that will draw a bright line about what is legal
and not. You know, Congress passed a law that says you can't
find out what videos we rent. We need to pass a law, for anybody
who questions this practice, that it is clear that this is illegal to go
find out who I call, when I call them and divulge that information.
Of course, pretexting goes much beyond phone records, as we
have, unfortunately, learned in this committee, so we need to pass
that legislation into law, and we need to do it soon.
I also want to know, are these practices used on other boards in
America? And some of our witnesses today probably serve on
multiple boards. I want to know whether these practices of
pretexting are thought to be okay to go after competitors to find out
what they may know or who they are talking to. And I am not
alleging that HP engages in that, but clearly this is a practice that,
frankly, 6 months ago I didn't even know existed. I never heard of
the word "pretexting," and I doubt that I am alone in that. Because
to me, the synonym of pretexting is lying, because that is what it is
about; I am going to lie to somebody to get the personal and
private information on somebody else so that I can use it to my
advantage. And I just think that is unacceptable, it is outrageous,
and people better come clean about how they have done it and how
they are never doing it again, and then we need to make sure that
the law is crystal clear.
Mr. Chairman, I appreciate the work you put into this, and I
look forward to hearing from the witnesses who will be actually
willing to testify today. Thank you.
MR. WHITFIELD. Thank you, Mr. Walden.
MR. WHITFIELD. At this time the Chairman recognizes the
Ranking Member of the full committee, Mr. Dingell of Michigan.
MR. DINGELL. Mr. Chairman, thank you, and thank you for
holding this hearing.
This morning we have a fine case study of deceit, dishonesty,
improper behavior, probably criminal misbehavior, and we have a
fine display of arrogance, coverup, and probably gross stupidity.
We have before us today witnesses from Hewlett-Packard, a
respected American company, to discuss a plumbers' operation
that would make Richard Nixon blush were he alive. And calling
the folks who did or allowed or participated in this "Keystone
Kops" is an insult of the grossest sort to the original Keystone
Kops.
Hewlett-Packard, as I have mentioned, is a well-respected
company in the halls of Congress and around the world, appears
before us to answer for using lies and deception to obtain
telephone records and other sensitive personal information in order
to uncover the source of leaks to the press. Now, I have to ask our
witnesses, "What were you thinking?"
Where was the management while this investigation was
running amok? Why weren't you paying attention at the briefings,
and why didn't you read the reports that raised red flags?
Where was the Board of Directors? I understand board leaks
could undermine a company's planning and curtail frankness at
board discussions, but the cure here proves to have been far worse
than the disease; it now poses a severely greater threat to
Hewlett-Packard. Where was the board leadership and
responsibility?
One interesting thing is where were the lawyers? The red flags
were waving all over the place raising questions about the legality
of pretexting, but none of the lawyers stepped up to their
responsibilities.
This morning we are probably going to have a very interesting
exercise in which witnesses appearing at that crowded witness
table amongst the lawyers will be taking the Fifth Amendment.
One must ask, have we here a law which is so obscure, curious or
nonexistent that lawyers couldn't tell what was the law? Or that
they participated actively? Or that they were part of the exercise
about which we are now having proper complaints?
Now, I note that the Congress has not stepped up either. What
happened to this committee's legislation, H.R. 4943, the
Prevention of Fraudulent Access to Phone Records Act? It came
out of this committee with a heavy vote, bipartisan participation,
under the effective leadership of our Chairman and the senior
Members on both sides of the aisle, and indeed all of the Members.
That bill would permit the FTC to seek civil penalties against
pretexters, and to provide expanded protections to customers' call
records. The bill came out, as observed by Ms. DeGette, and on
May 2, 2006, it was scheduled for consideration on the floor of the
House of Representatives. In some curious fashion, it disappeared.
It was pulled from the suspension calendar where it would have
passed comfortably under expedited process. But without
explanation of any sort, it has not been heard of or heard from
since. Why did this happen? Who did it, and why?
Also, no one in the Administration is stepping up either. I
submitted questions for the record of this subcommittee's June 21
hearing asking comments from the executive branch, homeland
security and law enforcement agencies on how the bill could be
changed to address any concerns that they might have from a
national security standpoint. I have been informed that the
response is being held up--I assume diligently--by the Office of
Management and Budget, which appears to be another black hole.
I commend the Chairman of the subcommittee for holding 2
days of hearings on this matter, it is most important; but hearings
are going to be a poor substitute if the committee's bill remains in
legislative limbo. I suggest that we all should get behind the bill
again and see to it that it is enacted into law so that perhaps we
don't have so many distinguished Americans coming before this
committee in the most profound embarrassment to take the Fifth or
explain in some curious red-faced way why they or the entity of
which they are a part is engaged in such shameful and shameless
behavior.
Thank you very much.
[The prepared statement of Hon. John D. Dingell follows:]
PREPARED STATEMENT OF THE HON. JOHN D. DINGELL, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
Mr. Chairman, thank you for holding this hearing. We have
before us witnesses from Hewlett-Packard to discuss a plumbers'
operation that would make Richard Nixon blush were he still alive.
And calling folks who did this, or allowed this, "Keystone Kops"
is an insult to the original Keystone Kops.
Hewlett-Packard, a company well respected in the Halls of
Congress and around the globe, appears before us today to answer
for using lies and deceptions to obtain telephone records and other
sensitive personal information in order to uncover the source of
leaks to the press. I have to ask our witnesses, "What were you
thinking?"
-- Where was management while this investigation was
running amok? Why weren't you paying attention at
briefings and why didn't you read the reports that raised red
flags?
-- Where was the board of directors? I understand board leaks
can undermine a company's planning and curtail the
frankness of board discussions. But the cure, in this case,
was far worse than the disease, and now poses a far greater
threat to Hewlett-Packard. Where was board leadership and
responsibility?
-- Where were the lawyers? There were red flags waving all
over the place, raising questions about the illegality of
pretexting. But none of the lawyers stepped up to their
responsibilities.
Unfortunately, Congress has not stepped up either. What
happened to the Committee's legislation, H.R. 4943, the
"Prevention of Fraudulent Access to Phone Records Act"? That
bill would allow the FTC to seek civil penalties against pretexters,
and provide expanded protections to customer call records. On
May 2, 2006, this bill was scheduled for consideration on the Floor
of the House of Representatives. It was pulled from the Suspension
Calendar, without explanation, and has not been seen or heard
from since. Who did it, and why?
Also, no one in the Administration is stepping up either. I
submitted questions for the record of this Subcommittee's June 21,
2006, hearing, seeking comments from Executive Branch
homeland security and law enforcement agencies on how the bill
could be changed to meet any concerns they might have. I have
been informed that the response is being held up by the Office of
Management and Budget. Why can't I get answers?
I commend the Chairman of the Subcommittee for holding two
days of hearings on this important issue. But hearings will be a
poor substitute if the Committee's bill remains in legislative limbo.
MR. WHITFIELD. Thank you, Mr. Dingell.
MR. WHITFIELD. At this time I recognize Mrs. Blackburn of
Tennessee for her opening statement.
MRS. BLACKBURN. Thank you, Mr. Chairman. I do want to
thank you for holding the hearing today.
The Energy and Commerce Committee has focused on the
pretexting issue this year, as you have heard my colleagues
mention in their statements, and it appears we were correct to
recognize that this subject was a problem.
Today's inquiry, I believe, will reaffirm our previous work,
which showed a need for legal clarity regarding pretexting, and we
thank our witnesses for coming before us today.
We are not here to serve as judge and jury of HP and their
actions; their shareholders, the stakeholders and the legal system
have that responsibility. Our job today is to focus our attention on
the action and the practice of pretexting.
Currently, the law regarding pretexting is ambiguous. As
Mr. Dingell just said, this case does illustrate how some have taken
advantage of that ambiguity. Ethical behavior is not always
something that we can regulate. We certainly cannot mandate it,
but we certainly can punish actions that are both unethical and a
violation of others' rights.
Our committee is correct to be concerned with corporate
governance and the American corporate culture. The trust and
integrity of the American people toward the American corporate
culture and our free enterprise system depends on ethical behavior
and an element of trust. It is with deep regret that we see that there
is a violation of that trust.
I think we ought to be clarifying the concept of pretexting. The
term sounds innocuous, but the reality is that it is theft, and the act
of pretexting is purposeful. It is an action meant to deceive,
defraud and obtain information one is not entitled to have. It is a
more modern problem, but one this committee has recognized and
is working to address.
In January, my colleague Representative Inslee and I
introduced the Consumer Telephone Records Protection Act of
2006. The bill dispenses with the ambiguity in laws governing the
action prohibiting individuals or entities from fraudulently
obtaining another person's telephone records under false pretext,
soliciting someone to obtain phone records under false pretext,
selling phone records or fraudulently obtaining under false pretext.
Violations would be criminal offenses punishable by up to 5 years
in prison, and $250,000 in fines for individuals and $5,000 in fines
for companies, which is a Class D felony. These penalties are
doubled for an aggravated offense.
We have passed a similar bill with civil penalties; these bills
would clearly have penalized those who engage in the sort of
behavior we will hear testimony about this morning.
We are already receiving information that numerous companies
are profiting by using suspect and irresponsible methods to gain
access to consumers' telecommunications records. When a
Fortune 15 company contracts with one of these companies, yes, it
gets our attention, and rightfully so.
We want to know who in the company or in the private
investigation firms came up with the proposal to pretext. Who
created and ran the Jacob Project, which used suspect methods to
gain information from media sources? We hope companies aren't
using these methods to engage in corporate espionage to gain a
competitive advantage over other companies or over innovators or
other creators, but we do want to know how pervasive is this
practice in America's corporate boardrooms. Are there other
companies that are using pretexting for other reasons?
I look forward to the testimony today. I hope we learn that HP
is no longer using the services of the companies to monitor their
Board members or the employees, or, just as concerning, using
these tactics to monitor or spy on other companies.
Thank you, Mr. Chairman, I yield back.
MR. WHITFIELD. Ms. Schakowsky of Illinois is recognized for
her opening statement.
MS. SCHAKOWSKY. Thank you, Mr. Chairman and Ranking
Member, for holding today's hearing on Hewlett-Packard's
pretexting scandal. I am glad that we have the opportunity to
further examine what is undoubtedly the most notorious case of
pretexting for personal phone records to date.
In July 2005, I circulated a letter to my congressional
colleagues drawing attention to the burgeoning practice of
pretexting of phone records. I urged them to join me as cosponsors
of the SAFECALL Act, which is a somewhat tortured acronym for
Stop Attempted Fraud Against Everyone's Cell and Land Lines
Act, a bill that would expressly prohibit pretexting for phone
records. I am proud that my bill was used as the basis for title 1 of
H.R. 4943, the Prevention of Fraudulent Access to Phone Records
Act, which passed our committee unanimously. We drafted the
bipartisan H.R. 4943 because questions were raised about whether
pretexting for phone records was legal, not to mention the safety
and privacy concerns that it raises.
The FTC had successfully brought pretexting cases under its
Section 5 authority which prohibits unfair or deceptive acts and
practices. You would have thought that that would have set the
stage for understanding that this is not a legal act. A number of
States, including my home State of Illinois, under our Attorney
General Lisa Madigan, used their general consumer protection and
consumer fraud statutes to file suits against the practice, and now,
along with 11 other States, Illinois has passed a law. But
obviously there are still those who missed the point and choose to
dabble in what they claim is a grey area of the law.
We need to pass H.R. 4943, and maybe instead of naming post
offices for the rest of--most of today, we can do it before we
recess.
Hewlett-Packard is a perfect example. When Kevin Hunsaker,
HP Senior Counsel and Director of Ethics, asked whether
pretexting for board members' and reporters' phone records was,
quote, "above board," unquote, Tony Gentilucci, HP's
Investigations Manager, replied, quote, "I think it is on the edge,
but above Board," unquote. Hunsaker, instead of demanding an
explanation or ringing the alarm bells, responded, quote, "I
shouldn't have asked," unquote.
Additionally, HP's September filing with the FCC revealed
that the Board was advised by its outside General Counsel Larry
Sonsini that pretexting for phone records was, quote, "not
generally unlawful," unquote. The filing went on to say, "but such
counsel could not confirm that the techniques employed by the
outside consulting firm and the party retained by that firm
complied in all respects with the applicable law," unquote.
Hewlett-Packard's action and hedging about pretexting's
legality demonstrates just how pressing it is to pass our bill to put
an end to all questions.
As I said, Congress and at least 12 States that have passed
antipretexting laws agree that pretexting is unacceptable, and that
the ends, in HP's case it was squelching Board leaks, do not justify
the means.
What makes the HP story more disheartening was HP was
believed to be a corporation that set business standards that others
should follow. In January 2005, HP was named the most trusted
company in America for privacy. In July 2006, the Commerce,
Trade, Consumer Protection Subcommittee, of which I am the
Ranking Member, invited HP to testify about what it does to raise
the bar on consumer privacy protections. Little did we know that
when we were trying to learn about its best practices, HP had just
been engaging in the worst practices out there. If corporations that
are supposed to be so reputable are employing such legally and
ethically questionable behavior--I would argue actually that the
case is settled--we have to ask what other corporations are doing.
So I very much look forward to hearing from today's
witnesses. I wish all of those that were called today would fully
testify. And I truly hope that we can get to the bottom of this
scandal. Thank you.
MR. WHITFIELD. The Chair recognizes Mr. Barton of Texas,
who is Chairman of the full Energy and Commerce Committee.
CHAIRMAN. BARTON. Thank you, Chairman Whitfield. Thank
you, Ranking Member Stupak, for continuing this investigation.
We are convened here to examine the facts of the
Hewlett-Packard pretexting scandal. Pretexting is the use of
deception to discover who you have been on the phone with, and
maybe even where you were. In plain language, it is pretending to
be somebody you are not to get something you probably shouldn't
have to use in a way that is probably wrong.
We have been investigating it because most Americans believe
that their phone records are theirs, that their private property
should only be accessed with their permission.
Pretexting first came to this subcommittee's attention when it
was reported that the Chicago Police Department, of all people,
had warned undercover police officers that suspicious drug dealers
could expose them just by poking through their phone records.
Months of investigations and hearings produced plenty of troubling
facts and even some news. Now today at this hearing it is global
news, as you can see all the cameras and reporters that are in the
room, because nobody would have guessed that such a great
company as Hewlett-Packard, one of the first high-tech companies
in the United States, would employ the methods of pretexting that
are sometimes used to chase after cheating spouses in order to stalk
its own Board members, and believe it or not, even tail journalists.
But against what standard should Hewlett-Packard's conduct
be measured? I guess the best place would be a quote from an
e-mail written by a Hewlett-Packard security employee on August
the 23rd of this year. The subject line of that e-mail reads,
"Standards of Business Conduct," and the author writes, and I
quote, "This investigation will be a defining case which will test
the company's claim of having uncompromising integrity," end
quote. I should say so.
This hearing is going to examine a year-long course of
questionable conduct led by Hewlett-Packard's Chairman of the
Board and reviewed by Hewlett-Packard's General Counsel, who I
am told has resigned this morning, or has announced that she is
going to resign. That conduct included, among other things,
obtaining personal phone records through pretext, physical
surveillance, monitoring of employees' instant messaging over the
Internet, planting spyware or attempting to plant spyware on a
journalist's computer, and even planning to put spies in
newsrooms.
I think it will be some time before the American corporate icon
of Hewlett-Packard can reclaim its mantle, self-imposed, but again,
"uncompromising integrity," end quote. The public,
Hewlett-Packard shareholders, and this committee are all very
concerned that such a great company has strayed off course. And I
have to say that as alarming as these details that have been
disclosed are, I wonder if Hewlett-Packard would have and could
have done more to right the ship. The company seems paralyzed.
On September the 6th of this year, HP publicly disclosed to the
Securities and Exchange Commission that the company had
obtained personal phone records procured through pretext as part
of an effort to find an individual who was leaking confidential
information. Records provided to this committee show that phone
records were being pulled by HP's internal investigation team for
more than a year, with the approval and knowledge of both
then-Chairman Dunn and General Counsel Baskins.
It is my understanding that the day-to-day operations were
controlled by the company's lead ethics attorney Kevin Hunsaker
so that the investigation could be protected by the attorney/client
privilege. Mr. Hunsaker would frequently report to Ms. Dunn and
to Ms. Baskins about the developments in the next steps in the
investigation. Yet not until last Friday, September the 22nd, did HP
force Patricia Dunn's resignation.
I also have to say that I am troubled to find that the Board's
outside counsel Larry Sonsini learned last April that the
investigation included information from fraudulently obtained
phone records. Why didn't he immediately recommend putting the
brakes on the investigation? Did he ask any questions about the
investigative methods employed by Ms. Dunn, Ms. Baskins or Mr.
Hunsaker?
On June 28th of this year, instigated by concerns of former
Board member Tom Perkins, Mr. Sonsini reported to Mr. Perkins
that pretexting for phone records was, I quote, "a common
investigatory method," end quote, and that the, quote, "process was
well done and within legal limits," end quote. I hope that Mr.
Sonsini will explain to us exactly what due diligence he undertook
before providing his assessment of the legality of pretexting for
phone records. And again, pretexting is pretending to be
somebody you are not to get something you probably shouldn't
have to use in a way that is probably wrong.
By coincidence, just a week before Mr. Sonsini's e-mail, the
Federal Bureau of Investigation testified before this same
subcommittee about its position on the legality of procuring
records through pretexting. The FBI testified that there are
compelling reasons to believe such operations violate Federal law,
including the Wire Act. In fact, over the next 2 days of hearings,
we actually expect several other individuals--and several is
actually--I should say numerous individuals to invoke their Fifth
Amendment right against self-incrimination, which they are
obviously entitled to do, and to decline to answer our questions
about their involvement with pretexting for phone records. It is
funny to me that if you have to invoke your Fifth Amendment
right, you are doing something that is illegal.
I am still waiting for someone to describe a legitimate way,
short of a subpoena issued by a judge or Congress, to obtain
another person's phone records without their permission.
I would like to close on this note. Whether such activities are
already illegal or not, this committee has done its part to pass a bill
that makes it abundantly clear where the Federal government
stands regarding pretexting for personal records.
On March the 8th, the Prevention of Fraudulent Access to
Phone Records Act, H.R. 4943, was unanimously, unanimously
reported out of this committee. H.R. 4943 would make it illegal to
obtain cell phone records fraudulently, as well as to solicit or sell
such records. I am, of course, disappointed by the delays that this
bill has experienced since it left this committee. It has not yet
come to the floor for a vote, but I have asked early this week that it
be put on the floor as soon as possible. And I am going to continue
to request that the House of Representatives vote on this bill on the
floor before the Congress adjourns this year.
We must make pretexting clearly illegal. There is no room in
our society for pretexters getting your phone records. If it can
happen to a member of the Board of directors of a Fortune 500
company like Hewlett-Packard, it can happen to any of us.
With that, Mr. Chairman, I yield back.
[The prepared statement of Hon. Joe Barton follows:]
PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN.,
COMMITTEE ON ENERGY AND COMMERCE
Thank you, Chairman Whitfield. We are convened here to
examine the facts of the Hewlett-Packard pretexting scandal.
Pretexting is the use of deception to discover who you've been on
the phone with, and maybe even where you were. We've been
investigating it because the fact that this can be done and that it
somehow seems legal is obnoxious to most and downright
dangerous to some.
It first came to our attention when it was news that the Chicago
Police Department had warned undercover police that suspicious
drug dealers could expose them just by poking through their phone
records. Months of investigation and hearings produced plenty of
troubling facts, but even some news. Now it's suddenly global
news, because nobody could have guessed that a great enterprise
like Hewlett-Packard would employ the methods of hired
gumshoes chasing after cheating spouses, in order to stalk its own
Board members and tail journalists.
But against what standard should H-P's conduct be measured?
I guess the best place would be with a quote from an email,
written by a Hewlett-Packard security employee on August 23rd of
this year. The Subject line of that email reads: "Standards of
Business Conduct," and the author writes: "This investigation will
be a defining case which will test the company's claim of having
uncompromising integrity."
I should say so. This hearing will examine a year-long course
of questionable conduct led by the company's Chairman of the
Board and reviewed by H-P's General Counsel. That conduct
included, among other things, obtaining personal phone records
through pretext, physical surveillance, monitoring of employees'
instant messaging, planting spyware on a journalist's computer,
and even planning to put spies in newsrooms. Mr. Chairman, I
think it will be some time before this American corporate icon can
reclaim the mantle of "uncompromising integrity" again.
The public, H-P's shareholders, and this Committee are all
very concerned that the company has strayed far off course. And I
have to say that, as these alarming details have been disclosed, I
wonder if H-P could have done more to right the ship. Until
recently, a company known for innovation and agility seemed
paralyzed.
On September 6, 2006, H-P publicly disclosed to the Securities
and Exchange Commission that the company had obtained
personal phone records procured through pretext, as part of an
effort to find an individual who was leaking confidential business
information. Records provided to this Committee show that phone
records were being pulled by H-P's internal investigation team for
more than a year, with the approval and knowledge of both then
Chairman Dunn and General Counsel Baskins. It is my
understanding that the day-to-day operations were controlled by
the company's lead ethics attorney, Kevin Hunsaker, so that the
investigation could be protected by the attorney-client privilege.
Mr. Hunsaker would frequently report to Ms. Dunn and Ms.
Baskins about the developments and the next steps in the
investigation. Yet not until last Friday, the 22nd of September, did
H-P force Patricia Dunn's resignation.
I also have to say that I am troubled to find out that the Board's
outside counsel, Larry Sonsini, learned last April that the
investigation included information from fraudulently obtained
phone records. Why didn't he immediately put the brakes on H-
P's investigation? Did he ask any questions about the investigative
methods employed by Ms. Dunn, Ms. Baskins, or Mr. Hunsaker?
On June 28th of this year, instigated by the concerns of former
Board member Tom Perkins, Mr. Sonsini reported to Mr. Perkins
that pretexting for phone records was "a common investigatory
method" and that the "process was well done and within legal
limits." I hope that Mr. Sonsini will explain to us exactly what due
diligence he undertook before providing his assessment of the
legality of pretexting for phone records.
By coincidence, just a week before Mr. Sonsini's email, the
Federal Bureau of Investigation testified before our Subcommittee
about its position on the legality of procuring records through
pretext. The FBI testified that there are "compelling reasons" to
believe such operations violate federal law, including the Wire
Act. In fact, over the next two days of hearings, we actually
expect several individuals to invoke their Fifth Amendment right
against self incrimination - as they are obviously entitled to do -
and decline to answer our questions about their involvement with
pretexting for phone records. I am still waiting for someone to
describe a legitimate way - short of a subpoena - to obtain another
individual's personal phone records.
I would like to close on this note, Mr. Chairman. Whether
such activities are already illegal or not, this Committee has done
its part to pass a bill that makes it abundantly clear where the
Federal government stands regarding pretexting for personal phone
records. On March 8th, the "Prevention of Fraudulent Access to
Phone Records Act," (H.R. 4943) was unanimously reported out of
this Committee. H.R. 4943 would make it illegal to obtain cell
phone records fraudulently, as well as to solicit or sell such
records. I am of course disappointed by the delays, but will
continue to push the House leadership to get our bill to the floor
for a vote this Fall. We must make pretexting clearly illegal.
There is no room in our society for pretexters getting your phone
records. If it can happen to a member of the board of directors of a
Fortune 500 company, it can happen to any of us.
I yield back.
MR. WHITFIELD. The gentlelady from Wisconsin,
Ms. Baldwin, is recognized for 5 minutes.
MS. BALDWIN. Thank you, Mr. Chairman.
Unfortunately, it has taken this Hewlett-Packard boardroom
spying scandal to make pretexting a household word.
Pretexting is simply a fancy term for lying and deceiving.
Regrettably, this type of private invasion will now be associated
with the HP way, a once proud reputation of the highest integrity
and ethical standards now tainted.
The committee's investigation so far has turned up a textbook
case of exactly how not to operate as a corporate board. Bickering
and division between HP's Board members created an atmosphere
of antagonism and mistrust.
Investigation into the source of boardroom leaks concerning
what appears to be rather benign, albeit confidential company
information were authorized against at least seven Board members,
nine journalists and two HP employees, as well as some of their
relatives. Unsavory techniques, including pretexting phone
records, trafficking of Social Security numbers, a sting operation
through a fictitious person, tracer spyware, physical surveillance,
the planting of undercover operatives, even the search of
individuals' trash at home may have been employed during this
investigation.
Despite the involvement of teams of lawyers specializing in
corporate ethics, events of the investigation code-named Kona 1
and Kona 2 unfolded like the plot of a third-rate detective novel.
The laundry list of inappropriate investigative conduct, lax
oversight and poor legal advice will be further explored today. But
even when the dust settles, when we get to the bottom of who
knows what when, an impression of corporate America turned
rogue spying operation will persist in the minds of the public. It is
one of the highly unfortunate consequences of HP's conduct.
People will wonder how many companies hire third-party
investigators to spy on their own employees, Board members or
outside contacts. They will wonder how their own phone records
could be obtained by their employers under false pretenses, or how
their Social Security numbers could be unscrupulously shared with
strangers, and how their e-mails could be embedded with spyware,
secretly mining personal information.
HP, known for durable high-tech products, has now given us
another lasting artifact, the perception of corporate America as our
next Big Brother. Still, one silver lining of this scandal is that the
public is now much more aware of the concept of pretexting.
I believe pretexting in the wireless industry is only the tip of
the iceberg; therefore, a comprehensive legislative approach is
necessary to cover all sectors where pretexting is a possible
method to breach personal data security.
Our committee has worked diligently and in a bipartisan
manner to pass legislation that would outlaw the specific tactics
involved in the HP scandal. And I would further urge
criminalization of pretexting to encompass the full spectrum of
telecommunications and communication services, including
records obtainable from calling cards and Internet websites. The
protection of consumers' fundamental rights to privacy simply
cannot rely on patchwork policymaking.
Now, make no mistake, I believe that existing law covering
unfair and deceptive business practices already prohibits
pretexting, but if corporate America desires further guidance on
whether highly unethical behaviors are indeed legal or illegal, as
demanded by some of the witnesses testifying before us today, our
committee should provide assistance by enacting clear and
overarching bright line rules to outlaw such behavior once and for
all.
When Dr. George Keyworth, one of the subjects of the leak
investigation, was confronted with the results of the probe during a
Board meeting, he reportedly exclaimed, and I quote, "I would
have told you all about this. Why didn't you just ask?"
It seems that HP could have easily avoided this whole mess by
applying the most basic principles of transparency and common
sense. For working Americans in 2001, the scandal surrounding
Enron challenged their trust in the markets. Today the HP scandal
is shattering their expectations of telecommunications privacy. HP
has led the Nation on an expedition into corporate intrigue. As
they were trying to contain the damage, the public deserves to
know what steps will be taken not only to restore confidence in this
company, but also to shore up the boundaries of privacy breached
by the scandal.
Thank you, Mr. Chairman.
MR. WHITFIELD. Thank you.
The Chair recognizes the gentlemen from Texas, Dr. Burgess.
MR. BURGESS. Thank you, Mr. Chairman. And thank you for
continuing your leadership in investigating this important issue.
Today's hearing is, unfortunately, additional evidence of the
deceptive practice of pretexting. I am confident that our
committee will continue to work diligently to protect the American
public and their private records. The war on privacy is fully
engaged, and we need to provide consumers with additional
protections.
Pretexting, as Chairman Barton told us, is the impersonation of
others to gain access to others' personal information, probably
crossing some legal line, but we all learned from an early age that
prying is wrong, and I don't understand how an intelligent board
from a venerable old company in this country could not know that
these deceptive actions were wrong. Even if you somehow
believed that what you were doing wasn't completely illegal, the
questions you asked shows that reasonable minds would still view
these actions as completely out of bounds. Others on this panel
have already asked, "What in the world were you thinking?"
The past 2 years your company even won awards such as the
most trusted company for privacy award, and that is--you are
supposed to be celebrating your respect for people's privacy and
encourage a safer digital marketplace. Your business model
depends upon the public's trust in a digital marketplace.
While Hewlett-Packard's headlines have brought the issue of
pretexting in the public eye, this committee has been working on
the matter for much of this year. In fact, this past spring the
Energy and Commerce full committee marked up comprehensive
legislation--you have heard others reference it, H.R. 4943--that
will make pretexting for telephone records illegal and will
strengthen security measures taken by telecommunications carriers
to protect such records. Perhaps a silver lining to this cloud is that
the questionable actions will be a call to action to get this
important legislation passed.
You have heard plenty of questions from, in fact, both sides of
the dais. You know, a lot of people in this country, myself
included, worry about outsourcing, worry about sending American
jobs and manufacturing overseas. But at the same time, these
types of actions--and you have heard people reference it this
morning--we may be forced to add additional regulatory layers
trying to legislate the corporate board to simply behave
responsibly, a Sarbanes-Oxley for ethics, if you will. I shudder to
think what that will look like. But it begs the question, how
widespread is this practice; how entrenched is this practice in
corporate boardrooms in this country?
And you have to worry about the collateral damage. You have
140,000 employees worldwide, 57,000 in this country, almost
10,000 in my home State in Texas, 200 in my home district in
north Texas. What about the responsibility to those employees?
What about the responsibility to the shareholders, not just direct
shareholders, but all those people hold mutual funds, 401(k)s,
exchange trading funds, Thrift Savings Plan programs?
Hewlett-Packard is a big player in all of those.
And then finally, you heard it referenced already, the violation
of the public trust. Again, the war on privacy is fully engaged
from several sectors in our society. And, Mr. Chairman, I hope
that we can encourage others in the Congress to get our bill to the
House floor and give consumers at least one more tool to fight
back.
And I yield back the balance of my time.
MR. WHITFIELD. The reason we are hesitating for a moment,
we have some Members here today who are not members of this
subcommittee, and there are members of the full committee. We
are going to ask unanimous consent for them to be able to make a
brief statement, but we want to get through the subcommittee first.
And the Chair recognizes Mr. Stearns of Florida.
MR. STEARNS. Thank you, Mr. Chairman. And of course we
all appreciate this hearing.
We are holding the hearing obviously to investigate the
disclosure that investigators hired by Chairwoman Patricia Dunn
used pretexting to obtain the phone records of directors and
journalists during the investigation into company media leaks.
Having been through the Enron oversight hearing,
Mr. Chairman, there are some similarities here, but this is unique, I
thought. Truth is stranger than fiction in this case. The evidence
we have seen shows that this investigation is part Keystone Kops, it
is part Mission Impossible, and perhaps part of All the President's
Men, all tied together.
I think, Mr. Chairman, if we ask Ms. Dunn if she thought she
was guilty, she would probably say, I was not. She would make
the case that she went to the lawyers, and the lawyers told her what
she is doing is acceptable, is legal; and that she continued to do
that, so she hired the investigators, and they went ahead and used
pretexting.
But I would remind her and others that I remember when Ken
Lay was here; and Jeff Skilling, of course, testified how he used
the cloak of cover, Vinson and Elkins. And they all, during the
Enron hearing, used the same kind of argument, that we have a
cloak of cover because we talked to legal people.
Now, when you look at the California Penal Code, which is
538.5, it says specifically, prohibits fraudulently obtaining
information from a public utility. This statute makes it unlawful
for any person to transmit or cause 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, customer
records, billing records, customer credit data or accounting data by
means of false or fraudulent pretenses. So I think the law is that
you can't use fraudulent means.
Obviously if you went ahead and did pretexting on Michael
Dell of Dell Computers, and you got his last 500 calls, would you
say that you had the right to do that, Ms. Dunn? I don't think you
would, and I don't think Michael Dell would appreciate that. So in
many ways I don't think you can hide behind the cloak of cover of
your legal team, and you must take personal responsibility.
But the impetus for this hearing perhaps has much larger
impact here in this country. I believe pretexting should be illegal
in any context, financial or otherwise. The action by the
Hewlett-Packard officials were unconscionable, but make no
mistake, the recent events surrounding it are just symptoms of, I
say, a much bigger problem.
Obviously the question would come, what did she know and
when did she know it? But another question is for Michael Hurd.
Can he say he knew nothing about this? He was advised, I think,
by e-mail. Can he also say, "Gee whiz, I am just out of the picture
here?" He is a Chief Executive Officer and now Chairman, and
certainly when Ms. Dunn notified him either by e-mail or by voice
or whatever, he did nothing; he just sat there and said, go ahead.
Because he could have said to her, "What are you going to do, who
are the investigators, and are they going to do something that is
fraudulent here?" So I think he has a certain amount of
responsibility and culpability here, and shares it with Patricia
Dunn.
The growing market for personal information is enormous, and
many of us have seen this, and that is why we need to pass
legislation to stop this. I chair a subcommittee called Commerce,
Trade and Consumer Protection. We have amassed extensive
records on these issues. I have introduced H.R. 4727, the Data
Accountability and Trust Act, which is designed to improve data
security and attack the scourge of privacy-infringing practices like
pretexting, that continue to be exploited on the Internet. The Data
Act will go a long ways to protecting the privacy of all Americans,
and I urge its passage. Our committee, you know, has also been
involved with other hearings dealing with privacy.
So in a larger sense, Mr. Chairman, we in Congress have to
step up to the plate, pass not only the Data Act, which came out of
my subcommittee and passed the full committee by a unanimous
vote almost, but we also must go to the heart of this unprecedented
assault on personal data and, more specifically, on our private
lives. And thank you, Mr. Chairman.
MR. WHITFIELD. The Chair recognizes the gentleman from
Washington, Mr. Inslee, for his opening statement.
MR. INSLEE. Mr. Chairman, we are all disturbed in our unique
way. I learned about this last Christmas when I was surfing the
Web reading some bloggers about people who will sell your
personal records on the Web for a hundred bucks, and I was
astounded that this was going on. And at the time I had this sense
that what was going on was there was this sort of underworld of
these scoundrels and sleazes that are operating in the dark recesses
of American society who are using pretexting to sell your phone
records on the Internet. And the thought that a major league,
respected company like HP would be involved in that just never,
never crossed my mind, and that is what is so disturbing to me.
We immediately, in January of this year, Marsha Blackburn
and myself, introduced a bill to make this, to close any possible
ambiguity about this, to make sure these are criminal violations,
and now this committee has, in fact, passed a bill that will give the
Federal regulators, the FTC and the FCC, the tools they need to
make sure that nobody does this, whether it is an HP or whether it
is one of these lowlife scoundrels.
But I have to say there is another sort of, if not scandal, at least
great disappointment here. We have now known about this since
last Christmas, and Americans today at this late date do not have
protections against pretexting. Neither has the loophole or any
ambiguity been closed, nor has the bill that this committee basis--
on a bipartisan--passed to give the regulators the tools and a tool
box to put a hammer to it and stop it.
Now, I want to commend Chairman Barton for his work on this
and some of my Republican colleagues, but I have to tell you, it
isn't just the leadership failure in HP, there has been a leadership
failure in the GOP in getting this job done. And I would like to
know who in the GOP leadership has their foot on this bill that has
put it on ice? We passed it, it was scheduled to be on the floor in
May under Chairman Barton's leadership, we passed it in this
committee in March, and nothing happens. That is a story here,
too, that I would like to get to the bottom of. And while we are
rightfully dumping every outrage we can on HP leadership, HP
leadership may look back up here at the GOP leadership and say,
how come you are not moving this bill? I have talked to the
Intelligence Committee to see if they have got some hold on it. No
problems there. So who is the little secret force here that has got
control of this Congress that is stopping us from passing a bill to
stop pretexting? I would like to know who that is, and I would like
an answer from GOP leadership why they are not moving this bill.
And I also hope today that we learn some more about how deep
this is. I join my colleagues in wanting to know whether or not
HP, if they did this to their own, what are they doing to their
business competitors? I would like to know if this is a deeper
situation that is going on, because this is clearly not the act of just
one rogue employee. It does appear to be a widespread, concerted
effort on multiple fronts to violate people's personal privacy, and
we would like to know where it is so that we can get the job done.
I will tell you one thing I hope comes out of this hearing. I
hope the message is delivered to the leadership of the House of
Representatives to pass this bill in the next 24 hours. We can have
this on the suspension calendar tomorrow night so we can pass this
bill and not have to wait until some lame-duck session. And I hope
that that is one thing that comes out of this committee hearing.
Thank you.
MR. WHITFIELD. The Chair recognizes the gentleman from
New Hampshire for his opening statement, Mr. Bass.
MR. BASS. Thank you, Mr. Chairman. And I appreciate you
holding this hearing.
A couple of observations. First of all, I think we agree on both
sides of the aisle here that H.R. 4943 should be brought to the floor
of the House and passed. I hope that what we have gathered from
the information that we receive in this hearing is not so much who
did what, where, when, how and to who, but rather whether
agreeing that the process that--or the events that unfolded at
Hewlett-Packard were not good, were not right, and probably not
lawful, but how we can apply this issue to the legislative measure
before us today, and whether or not the witnesses that are testifying
today feel that the bill that we wish to have voted upon on the floor
of the House is adequate to address the problem and prevent future
occurrences like this from happening; or whether or not we need to
address the issue in a broader fashion.
I think this is a helpful hearing to the subject at hand, and I
look forward to hearing the testimony of the witnesses.
Thank you, I yield back.
MR. WHITFIELD. I believe all members of the subcommittee
now have given their opening statements, and last night we were
approached by two members of the full committee who wanted to
make an opening statement. So I am going to ask unanimous
consent that those two, Ms. Eshoo, who represents Palo Alto, be
recognized for 3 minutes for her opening statement. And unless
there is objection--and Mr. Otter, do you want--do you want to
make an opening statement, as well? Okay, so Mr. Otter and Ms.
Eshoo and Mr. Markey for 3 minutes and without objection, I will
recognize Ms. Eshoo for her opening statement.
MS. ESHOO. Thank you, Mr. Chairman for allowing me to be a
guest of the subcommittee this morning, as a member of the full
Energy and Commerce Committee. This is obviously for the
people of my Congressional district, including thousands of HP
employees, a sad day for us.
HP is headquartered, as you all know, in Palo Alto. The
meaning of the words, Palo Alto is tall tree. And that is what HP
has been from its earliest days to this new part of a new century. It
is headquartered in Palo Alto, employs thousands of my
constituents, decent people who have helped to lift up this
company that has made enormous contributions to the American
economy.
HP is really the seminal company in Silicon Valley. It is the
progenitor of so much that has followed. The two gentlemen that
founded the company, Bill Hewlett and David Packard, changed
our region. Silicon Valley--and those that come from the area are
privileged to live there--know that we would not be what we are
were it not for the billions of dollars that they have placed in trust
funds that have improved health care for Lucille Packard
Children's Hospital to countless, countless efforts that have made
our region really the envy of so many places in the United States,
and in the world.
So we are here on a troubled day, and deeply troubling, things
have taken place.
There is an irony, in my view, about all of this concern about
surveillance. I am not here to defend anything that isn't
defensible. But the irony today is--I think it is an irony--that on the
floor of the House, we are going to be considering the
Administration's domestic surveillance bill, where FISA is
essentially being overthrown, removed. And a whole new set of
issues, and the American people better get set for surveillance.
I would like to point out something that I think the Congress, in
addition to passing this bill, is going to have to address, and that is,
where does a publicly held company go when they have a member
of their board of directors that doesn't stop talking and damages
and walks away from not only the credibility of the company, but
also their fiduciary responsibility?
I think it is something that needs to be addressed. And I have
some questions about it--
MR. WHITFIELD. The gentlelady's time has expired.
MS. ESHOO. I welcome everyone here and thank you, Mr.
Chairman, for allowing me to be a guest of the subcommittee.
MR. WHITFIELD. The gentleman from Idaho is recognized for
3 minutes.
MR. OTTER. Thank you very much, Mr. Chairman, and I
appreciate very much the unanimous consent waiver that you have
given to us nonmembers of this subcommittee. But I am here more
today, I suspect, out of curiosity than the seeking, the actually
seeking of information. And my curiosity runs in a couple of
veins, and I think it was just mentioned by the lady from
California--whether or not we can really establish in this Congress
in this government, the moral high ground in order to sit in
judgment, write rules and regulations about activities in the private
sector that we don't enjoy the same control over in the public
sector.
And, so, whether it is, and I fully understand the gravity in the
difference in the situations. However, the process is no different.
People have an expectation of privacy. They should enjoy their
privacy. Yet we find out a very strong urgent message coming
from our own Justice Department about how perhaps that privacy
is not so dear as when the security of our government is being
threatened.
So I am looking forward with some curiosity as to how we are
going to maintain in light of some of the activities of the National
Security Agency and other agencies of our government, that have
been questioned in the recent past and how easily we are going to
sit on the bench in judgment of another who is simply trying to
protect the security, and bear in mind, Mr. Chairman, I am not
condoning any of this activity. I condemn it just as bad in the
private sector as I do in the government. So my curiosity is going
to keep me in this seat for as long as I can stay with you, Mr.
Chairman and thank you for the time.
MR. WHITFIELD. Thank you, Mr. Otter. The gentleman from
Massachusetts, Mr. Markey, is recognized for 3 minutes.
MR. MARKEY. Thank you, Mr. Chairman. The upshot of the
HP snooping and spying program is the compromise of personal
privacy for two HP employees, nine reporters, seven members of
the HP Board, and various family members of the same.
It involved illegal pretexting of phone numbers, Social Security
numbers, sifting through garbage, and electronic enticements to at
least one reporter to download malicious software willingly.
What has happened to our corporate culture? You used to ask
a company chieftain who does your PR? Who does your
advertising? Now, do we have to add the question, so who does
your spying? That is what the whole area has opened up. All of
this from a company on its website that says HP and its
subsidiaries respect your privacy and are committed to protecting
it.
Today, the subcommittee will be exploring the responsibility of
Hewlett-Packard's management for this illegal spying operation.
Who authorized the spying operation? Who oversaw it? What
were they thinking?
I am very concerned that HP may be suffering from Sergeant
Schultz syndrome, some in a position of authority are now saying,
I heard nothing, I saw nothing, I knew nothing. That is their
defense.
It is not believable.
Where were the lawyers when all this was happening? HP has
an experienced in-house legal staff as well as access to experienced
outside legal counsel. Where were these legal professionals when
this spying program was put into place?
Mr. Chairman, some are suggesting that there are ambiguities
in existing law which made it difficult for HP and its attorneys to
determine what the applicable law in this area really was. This is
absolutely absurd. What happened is already illegal.
Section 5 of the Federal Trade Commission Act has long
prohibited pretexting. In May of this year, the Federal Trade
Commission brought five court complaints charging Internet
information brokers with illegal trafficking and consumers
telephone number. It is already illegal.
The Telecommunications Act of 1996 added a new Section,
222 to the Communications Act; Section 222 clearly states that
customers' phone records can only be disclosed to the customer or
to someone else with the permission of the customer. I know that
because I was co-author of that legislation. And the wire fraud
statute also prohibits that kind of a practice--
MR. WHITFIELD. The gentleman's time has expired.
MR. MARKEY. I thank the Chairman. Either this is the tip of
the iceberg or it is the iceberg. If it is the iceberg, then Congress
must act to ensure that we never again see this as part of corporate
culture.
I thank the Chairman.
MR. WHITFIELD. At this time, the Chair will call forward the
following witnesses on the first panel and I would ask the staff
because we have seating assignments there, and I am not sure, it is
available to everyone, to make sure they are sitting in the right
seats.
But the first witness is Mrs. Ann Baskins, General Counsel for
Hewlett-Packard; Mr. Kevin Hunsaker, Ethics Counsel for
Hewlett-Packard; Mr. Anthony Gentilucci, Manager, Global
Investigations; Mr. Anthony DeLia, Managing Director for
Security Outsourcing Solutions; Mr. Joe Depante, Owner, Action
Research Group; Ms. Cassandra Selvage, Owner, Eye in the Sky
Investigations; Mr. Darren Brost, subcontractor to Action
Research; Ms. Valerie Preston, subcontractor to Action Research;
Mr. Bryan Wagner, subcontractor to Action Research; and Mr.
Charles Kelly, subcontractor to Action Research. If you all would
please come forward and have a seat at the table, we would
appreciate it.
Just the people whose name I called will be sitting at the table.
If there are legal counsel involved we will be introducing them as
we move forward but just the witnesses that I called will be sitting
at the table.
I apologize about the lack of space. I would say to those
participants on the first panel, this is an investigative hearing. It is
the tradition of the subcommittee to always take testimony under
oath, and I would ask all of you, do any of you have any difficulty
or do you object to testifying under oath this morning?
So if you all would please stand and raise your right hand I
would like to swear you in at this time.
[Witnesses sworn.]
Thank you very much. All of you are now under oath. Under
the rules of the House and the committee, each of you do have the
right to be advised by legal counsel as to your constitutional rights,
and I would ask each of you, do you have legal counsel here
today? If you do, if you would please raise your right hand.
Okay. Now, Ms. Baskins, would you please give us the name
of your legal counsel?
MS. BASKINS. I am represented by Cristina Arguedas.
MR. WHITFIELD. And Mr. Hunsaker, who is your legal
counsel?
MR. HUNSAKER. Michael Pancer.
MR. WHITFIELD. And Mr. DeLia, who is your legal counsel?
MR. DELIA. Mr. Kiernan.
MR. WHITFIELD. Mr. Depante, who is your legal counsel?
MR. DEPANTE. Richard Preira.
MS. SELVAGE. Ms. Van Gelder.
MR. WHITFIELD. And who is your legal counsel?
MR. GENTILUCCI. Miles Ehrlich.
MR. BROST. Susie Rebera Ariel.
MR. WHITFIELD. All right. Thank you for introducing legal
counsel. Now, Ms. Preston, do you have legal counsel?
MS. PRESTON. No.
MR. WHITFIELD. Mr. Kelly? And Mr. Wagner?
MR. WAGNER. No sir.
MR. WHITFIELD. At this time, the Chair would recognize
Ms. Baskins for purposes of making an opening statement, if she
so desires.
MS. BASKINS. Mr. Chairman, I have no opening statement.
MR. WHITFIELD. Turn your microphone on, I am sorry.
MS. BASKINS. I have no opening statement, Mr. Chairman.
MR. WHITFIELD. The Chair would then recognize
Mr. Hunsaker for purposes of making an opening statement.
MR. HUNSAKER. I have no opening statement, Mr. Chairman.
MR. WHITFIELD. The Chair would recognize Mr. Gentilucci
for purposes of making an opening statement.
MR. GENTILUCCI. Mr. Chairman, I have no opening statement.
MR. WHITFIELD. The Chair would recognize Mr. DeLia for
purposes of make an opening statement.
MR. DELIA. Mr. Chairman, I do not have an opening
statement.
MR. WHITFIELD. The Chair would recognize Mr. Depante for
purposes of making an opening statement.
MR. DEPANTE. Mr. Chairman, I do not have an opening
statement.
MR. WHITFIELD. The Chair would recognize Ms. Selvage for
purposes of making an opening statement.
MS. SELVAGE. Mr. Chairman, I do not wish to make an
opening statement.
MR. WHITFIELD. Chair would recognize Mr. Brost for
purposes of making an opening statement.
MR. BROST. Mr. Chairman, I have no opening statement.
MR. WHITFIELD. Chair would recognize Ms. Preston for the
purpose of making an opening statement.
MS. PRESTON. Mr. Chairman, I have no opening statement.
MR. WHITFIELD. Chair would recognize Mr. Wagner for
purposes of making an opening statement.
MR. WAGNER. Mr. Chairman, I have no opening statement.
MR. WHITFIELD. Chair would recognize Mr. Kelly for
purposes of making an opening statement.
MR. KELLY. Mr. Chairman, I have no opening statement.
MR. WHITFIELD. Chair then, since there are no opening
statements, would recognize himself for 10 minutes for the
purposes of questioning the witnesses.
And Ms. Baskins, does she have the exhibit book before her?
Would someone give Ms. Baskins our exhibit book, please.
MR. WHITFIELD. I would ask Ms. Baskins to turn to
Exhibit 124. I think they are numbered there. It is my
understanding, Ms. Baskins, from Hewlett-Packard's counsel, that
these handwritten notes are yours, and the notes dated June 15,
2005 have the heading "Project Kona." The first notes on the page
say, "Obtaining phone numbers is a time consuming process. Call
carriers Nextel, Sprint and use pretext to extract info, i.e., I didn't
make the call." Now this document and others show that you were
aware that HP was engaging in pretexting, that is obtaining
personal telephone records through impersonation fraud, and deceit
as a means of identifying the source of corporate leaks.
Ms. Baskins, did you honestly believe at the time and do you
believe today that such conduct is legal, ethical and consistent with
the Hewlett-Packard way?
MS. BASKINS. Mr. Chairman I respectfully decline to answer
based on the rights and protections guaranteed to me by the Fifth
Amendment of the Constitution of the United States.
MR. WHITFIELD. So Ms. Baskins, you are refusing to answer
all of our questions today based on the right against self
incrimination afforded to you under the Fifth Amendment of the
U.S. Constitution?
MS. BASKINS. Yes, Mr. Chairman.
MR. WHITFIELD. And it is your intention to assert that right for
any and all questions that would be asked today.
MS. BASKINS. Yes, Mr. Chairman.
MR. WHITFIELD. If there are no further questions from the
members of the committee, then I would dismiss you at this time?
CHAIRMAN. BARTON. Mr. Chairman, may I be recognized for a
question?
MR. WHITFIELD. Yes, sir.
CHAIRMAN. BARTON. Ms. Baskins, is it true that you have
resigned your position from Hewlett-Packard?
MS. BASKINS. Yes, Congressman.
CHAIRMAN. BARTON. Thank you.
MR. WHITFIELD. Then Ms. Baskins, you are dismissed at this
time subject to the right of the subcommittee to recall you if
necessary, and at this time, you are excused.
Mr. Hunsaker, if you would please turn to exhibit in the exhibit
book there, Exhibit 25. This exhibit shows a January 30, 2006
e-mail exchange between you and Anthony Gentilucci. And in his
e-mail to you, Mr. Gentilucci explains how Ron DeLia procured
phone records for Hewlett-Packard's investigation.
"The methodology utilized is social engineering. He has
investigators call operators under some ruse to obtain the call
records over the phone." Mr. Gentilucci later writes, "In essence,
the operator should not give it out, and that person is liable. I think
it is on the edge but above board." And your response was, "I
shouldn't have asked."
Mr. Hunsaker if you knew that the phone records being
obtained for Hewlett-Packard's investigations were being procured
through the use of a ruse or deceit, and that the legality and ethics
of pretexting might be in doubt, why did you permit the use of this
practice in the Kona 2 investigations?
MR. HUNSAKER. Mr. Chairman on the advice of my counsel I
am asserting my rights under the U.S. Constitution and will not
testify here today.
MR. WHITFIELD. So it is your intent then to assert that right in
response to any further questions that may be asked today?
MR. HUNSAKER. That is correct, Mr. Chairman.
MR. WHITFIELD. If other members of the committee do not
have a question, then I would dismiss you at this time subject to
the right of the subcommittee to recall you if necessary, and at this
time you are excused.
MR. HUNSAKER. Thank you, Mr. Chairman.
MR. WHITFIELD. Mr. Gentilucci, I would ask you in the
exhibit book to please turn to Exhibit 39. If you all could pass that
down to him. You will notice that this is an e-mail dated February
the 7th, 2006, addressed to you from Mr. Vince Nye, who I
understand worked for you at Hewlett-Packard.
In this e-mail, Mr. Nye states, "I have serious reservations
about what we are doing. As I understand Ron's methodology in
obtaining this phone record information, it leaves me with the
opinion that it is unethical at the least, and probably illegal. If it is
not totally illegal, then it is leaving HP in a position that could
damage our reputation, or worse. I am requesting that we cease
this phone number gathering method immediately, discount any of
its information. I think we need to refocus our strategy and
proceed on the high ground."
Mr. Gentilucci, despite the ethical and legal concerns expressed
to you by Mr. Nye, isn't it true that you continued to utilize
pretexting and other suspect tactics to obtain confidential
information about HP's employees, Board members and
journalists?
MR. GENTILUCCI. Mr. Chairman and other committee
members, I understand the Constitution of the United States gives
me the right not to be forced to be a witness against myself. And
due to other ongoing investigations, I must assert that
constitutional right. And I respectfully decline to answer the
committee's questions today.
MR. WHITFIELD. So you are asserting yourself Fifth
Amendment protection against self-incrimination, and it is your
intention to assert that right in any other questions that may be
asked of you today?
MR. GENTILUCCI. Yes, Mr. Chairman.
MR. WHITFIELD. If there are no further questions from other
members of the committee, then I will dismiss you at this time,
subject to the right of the subcommittee to recall you if necessary,
and at this time, you are excused.
MR. GENTILUCCI. Thank you.
MR. WHITFIELD. At this time, Mr. DeLia, I would ask for you
to please turn to Exhibit 4.
In Exhibit 4, in July of 2005, you e-mailed the report to Patricia
Dunn summarizing your findings in the Kona 1 leak investigation.
In this report, you state that telephone subscriber and call
registers are obtained verbally from the various telephone carriers
and that the investigation into the review of telephone records and
the backgrounds of BusinessWeek reporters and HP Board
members is continuing.
Mr. DeLia, did you or anyone working for you on behalf of
Security Outsourcing Solutions engage in pretexting, namely
obtaining access to someone's personal telephone records without
their consent through fraud, deceit or misrepresentation, as part of
an investigation by the Hewlett-Packard Company into leaks of
corporate information during 2005 and 2006?
MR. DELIA. Mr. Chairman, I must respectfully decline to
answer your questions based upon the rights afforded to me by the
Fifth Amendment of the Constitution of the United States.
MR. WHITFIELD. And is it your intention to assert your Fifth
Amendment rights to any further questions to be asked of you
today?
MR. DELIA. Yes, Mr. Chairman.
MR. WHITFIELD. If there are no further questions from other
members of the committee, then I dismiss you at this time subject
to the right of the subcommittee to recall you if necessary, and at
this time you are excused.
MR. DELIA. Thank you, Mr. Chairman.
MR. WHITFIELD. Mr. Depante, if you would please turn to
Exhibit 109 in the document book. It is the small book, not the
large book. There is a small book on the table somewhere.
Exhibit 109 is a request for the private phone records of
Mr. Robert Knowling submitted to Action Research Group by
Security Outsourcing Solutions on July 6, 2005. It appears that
you procured Mr. Knowling's detailed calling record through Eye
in the Sky Investigations.
Mr. Depante, did you and your company, Action Research
Group, obtain and sell to Mr. DeLia, consumers' personal phone
records that were obtained through pretexting, lies, deceit or
impersonation?
MR. DELIA. Mr. Chairman, on the advice of counsel, I would
invoke my Fifth Amendment privilege to decline comment at this
time.
MR. WHITFIELD. And it is your intention to assert that right to
any additional questions we may have for you?
MR. DELIA. Yes, sir.
MR. WHITFIELD. If there are no further questions from
members of the committee, we will dismiss you at this time subject
to the right of the committee to recall you if necessary, and at this
time, you are excused.
MR. DELIA. Thank you, Mr. Chairman.
MR. WHITFIELD. Ms. Selvage if you also would look at
Exhibit 109, this is a request for the private phone records of Mr.
Robert Knowling submitted to Action Research Group by Security
Outsourcing Solutions on July 6, 2005. The second page of this
exhibit is an e-mail you sent from your Eye in the Sky Yahoo
e-mail account. In it, you provided Action Research with
Mr. Knowling's detailed calling records, which Action Research
then passed on to Mr. DeLia.
Ms. Selvage, did you and your company, Eye in the Sky
Investigations, obtain and sell to Mr. Depante consumers' personal
phone records that you obtained through pretext, lies, deceit or
impersonation?
MS. SELVAGE. Mr. Chairman, and members of the committee,
I am joined here today by my attorney, Ms. Barbara Van Gelder. I
am aware of several ongoing criminal investigations relating to
Hewlett-Packard and its security contractors. I am still not aware
if I am connected to these investigations, or if so, how.
Given these circumstances and considering the fact that the
Fifth Amendment protects innocents who might be ensnared by
ambiguous circumstances as this committee's subpoena infers I
may be, I accept the advice of my counsel and respectfully decline
to answer any questions posed to me today on the basis of the
rights guaranteed to me by my Fifth Amendment rights.
MR. WHITFIELD. It is your intention to assert your Fifth
Amendment rights for any other questions we may have?
MS. SELVAGE. Yes, sir.
MR. WHITFIELD. If there are no further questions from
committee members, then we will dismiss you at this time subject
to the right of recall if necessary. And at this time you are
excused.
MS. SELVAGE. Thank you, sir.
MR. WHITFIELD. Mr. Brost, if you would turn to Exhibit 107,
this is a document from Action Research Group, showing requests
made by Security Outsourcing Solutions to Action Research Group
for phone-related records as well as the corresponding completed
order.
On page 11 of this exhibit is a handwritten note from you to an
Action Research employee providing subscriber information
requested by Security Outsourcing Solutions.
Mr. Brost, did you obtain and sell to Mr. Depante consumers'
personal phone records that you obtained through pretext, lies,
deceit or impersonation?
MR. BROST. Most respectfully, on advice of counsel, I wish to
invoke my Fifth Amendment rights.
MR. WHITFIELD. And is it your intention to assert your Fifth
Amendment right on any additional questions we may have?
MR. BROST. Yes, Mr. Chairman.
MR. WHITFIELD. If there are no further questions from
members of the committee I will dismiss you at this time subject to
the right of the Chair to recall you if necessary, and at this time
you are excused.
MR. BROST. Thank you.
MR. WHITFIELD. Ms. Preston, if you have the exhibit book and
document book, on page 3 of Exhibit 107, this is an e-mail from
you to Action Research Group which provides telephone
subscriber information requested by Security Outsourcing
Solutions. Pages 4 through 7 of that document also contain e-mails
in which you provided personal phone records to Action Research.
Ms. Preston, did you and your company, In Search Of, Inc.,
obtain and sell to Mr. Depante consumers' personal phone records
and other phone-related information that you obtained through
pretext, lies, deceit or impersonation?
MS. PRESTON. Mr. Chairman, I respectfully invoke my Fifth
Amendment right at this time.
MR. WHITFIELD. And is it your intention to assert that right for
any additional questions we may have for you?
MS. PRESTON. Yes, sir, at this time.
MR. WHITFIELD. Given that, if there are no further questions
from members of the committee, I will dismiss you at this time
subject to recall of the Chair if necessary, and at this time, you are
excused.
MS. PRESTON. Thank you.
MR. WHITFIELD. Mr. Wagner, if you would please turn to
Exhibit 112, this exhibit contains three e-mails that you sent to
Action Research Group in February, 2006. The first e-mail
includes two pages of Marian Keyworth's detailed personal phone
records. The second e-mail includes two pages of detailed phone
records for the landline phone at George and Marian Keyworth's
home. The third e-mail includes two pages of detailed phone
records for the Keyworths' fax machine.
Mr. Wagner, did you obtain and sell to Mr. Depante
consumers' personal cell phone records that you obtained through
pretext, lies, deceit or impersonation?
MR. WAGNER. Mr. Chairman, I respectfully invoke my Fifth
Amendment right.
MR. WHITFIELD. And is it your intention to assert that right for
any additional questions we may have for you?
MR. WAGNER. Mr. Chairman, I feel I have information that
could help the subcommittee in their quest to make this illegal, but
there are certain questions that I would not want to answer of
course.
MR. WHITFIELD. But you are asserting your legal right, your
Fifth Amendment right, for all the questions we may ask today?
MR. WAGNER. Yes, Mr. Chairman.
MR. WHITFIELD. If there are no further questions from
Members of the Committee we will dismiss you.
CHAIRMAN. BARTON. Mr. Chairman, before we let this witness
go, would you inform the subcommittee of who the Keyworths are,
since you asked the question.
MR. WHITFIELD. Yes, well, Mr. Keyworth was a member of
the Board of Directors of Hewlett-Packard.
CHAIRMAN. BARTON. And he is the one I understand who is
alleged to have leaked the information?
MR. WHITFIELD. That's true.
And so are you asserting your Fifth Amendment right?
MR. WAGNER. Yes, Mr. Chairman.
MR. WHITFIELD. If there are no additional questions from
Members of the Committee then we will dismiss you at this time
subject to the right of the subcommittee to recall you if necessary.
And at this time you are excused.
MR. WAGNER. Thank you, Mr. Chairman.
MR. WHITFIELD. Mr. Kelly. If you would please turn to
Exhibit 111. This is an e-mail that you sent to Action Research
Group in January 2006. The e-mail includes 3 pages of Dawn
Kawamoto's detailed phone records for the entire month of
January. And I believe that Dawn is a reporter for CNET News.
Now, Mr. Kelly, did you and your company, CAS Agency,
obtain and sell to Mr. Depante consumers' personal phone records
that you obtained through pretexting, lies, deceit or impersonation?
MR. KELLY. Mr. Chairman, I respectfully invoke my Fifth
Amendment privilege to decline comment at this time.
MR. WHITFIELD. And is it your intention to assert your Fifth
Amendment rights for any additional questions we may have
today?
MR. KELLY. Yes, sir.
MR. WHITFIELD. If there are no further questions from
members of the committee, I will dismiss you at this time subject
to the right of the subcommittee to recall you if necessary, and at
this time you are excused.
MR. KELLY. Thank you.
CHAIRMAN. BARTON. Mr. Chairman?
MR. WHITFIELD. Yes, Mr. Chairman.
CHAIRMAN. BARTON. I have been on the committee for
20 years, and I have been on this subcommittee for over half that
time. I have never had a hearing where no witness gave an
opening statement, where every witness took the Fifth. It is odd to
me that a practice, that every one of the individuals just before us
has in various forms indicated was totally legal, has invoked their
Fifth Amendment right against self-incrimination.
MS. DEGETTE. Will the Chairman yield?
CHAIRMAN. BARTON. I would.
MS. DEGETTE. I agree with the Chairman and as a former
lawyer myself, I cherish the right of witnesses to invoke their Fifth
Amendment right against self-incrimination. It is one of our
important constitutional provisions.
But it is very difficult for us in Congress to have an
investigation where all the witnesses come in, and at the very last
minute, inform the committee that they are invoking their Fifth
Amendment rights. It becomes almost the routine rather than the
exception.
And while I, in the corporate responsibility hearings, for
example, I felt that there were many, many witnesses, some of
whom are now in Federal prison, who should have invoked their
constitutional rights; in this case, I would have to agree with the
Chairman.
And furthermore I would say, I know it is not our staff's faults,
but when you haul in a whole panel of people like this just to have
them take the Fifth Amendment, I think it is a waste of the
committee's time and resources, and I think it is a waste of the
witnesses' time and resources and legal fees. I would hope we
would work with witnesses in the future to prevent this kind of
action.
CHAIRMAN. BARTON. Reclaiming my time, until this morning
indications were that only two individuals were going to take the
Fifth Amendment.
MS. DEGETTE. That is exactly what I am saying, Mr.
Chairman.
CHAIRMAN. BARTON. Which they have the right to do, and Mr.
Chairman, I would encourage you to work with the Ranking
Member of this subcommittee, the information that has been put
together in preparation for this hearing is very important. And I
would encourage you to work with the Minority to make it
available, the proper format to the general public and to law
enforcement authorities that are pursuing this case in other venues,
because both staffs have worked very hard to prepare for this
hearing.
We have got voluminous information that I think is accurate
and true information. And if we are going to put a stake through
the heart of pretexting, we need to inform the public and make
available the information that we have obtained, about just how
prevalent it is and how obnoxious it is.
MR. WHITFIELD. Thank you, Mr. Chairman. It is certainly our
intent to do that, and it has been stated before by many of our
members of the subcommittee and the full committee that it is our
desire to move this pretexting legislation we reported out, and
hopefully, we can do that.
At this time, I would like to call to the witness table the second
panel and on the second panel, we have Ms. Patricia Dunn, who is
the former Chairman of the Board of Hewlett-Packard Company,
Palo Alto, California. We have Mr. Larry Sonsini, who is the
Chairman of Wilson Sonsini Goodrich & Rosati from Palo Alto,
California. And we have Mr. Fred Adler, who is with IT Security
Investigations at Hewlett-Packard in Palo Alto, California.
I want to welcome you all to the witness table.
TESTIMONY OF PATRICIA DUNN, FORMER CHAIRMAN., OF THE BOARD, HEWLETT-PACKARD
COMPANY; LARRY SONSINI, CHAIRMAN., WILSON SONSINI GOODRICH & ROSATI; AND
FRED ADLER, IT SECURITY INVESTIGATIONS, HEWLETT-PACKARD COMPANY
MR. WHITFIELD. We appreciate very much you all being with
us this morning, and as you heard in my remarks to the earlier
panel, Oversight and Investigations, our subcommittee, does take
testimony under oath and, I am assuming that none of you have
any difficulty or objection to testifying under oath.
MR. SONSINI. No objection.
MS. DUNN. No, sir.
[Witnesses sworn.]
MR. WHITFIELD. Thank you very much. You are now under
oath, and you also understand that it is the rules of the committee
and the House that you are entitled to legal counsel. And Ms.
Dunn, I would ask you, do you have legal counsel with you this
morning.
MS. DUNN. Yes, I do, Mr. Jim Brosnahan. He is here this
morning.
MR. WHITFIELD. Thank you. And Mr. Sonsini, I know you are
an attorney, but do you have legal counsel with you this morning?
MR. SONSINI. Yes, I do. My counsel is Mr. Evan Chesler.
MR. WHITFIELD. And Mr. Adler, do you have legal counsel
request with you this morning?
MR. ALDER. Yes, I do. It is Mr. Malcolm Segal seated directly
behind me.
MR. WHITFIELD. Well, thank you very much for, as I said,
being with us and introducing your counsel, and at this time, Ms.
Dunn, we will recognize you for 5 minutes for your opening
statement.
MS. DUNN. Thank you, Mr. Chairman and other distinguished
members of this committee, I do appreciate the opportunity to
appear before you today.
All corporate directors have a solemn duty of confidentiality to
their fellow directors and to the shareholders they serve.
Boardroom leaks create unfair advantages for some shareholders
over others because stock prices can move on the unauthorized
disclosure of information.
Leaks corrode the trust that is fundamental to Board
functioning and expose companies to regulatory sanction under the
fair disclosure rules of the SEC. When the HP Board asked me to
accept the position of Nonexecutive Chairman early last year, I
expected challenges. But I never anticipated that the
circumstances currently surrounding HP could ever occur.
One of the first challenges I faced came from requests made by
directors to continue efforts to identify the source, or sources of
leaks that were undermining the Board's functioning.
I took this mandate seriously, because the leaks touched the
very heart of the company's most sensitive issues.
As detailed in my written testimony, I sought the advice of Bob
Wayman, the company's CFO and then acting CEO, whom I
respect greatly. He was the logical person to consult because all of
HP's control functions, including its legal and security groups,
reported to him.
He referred me to Kevin Huska, who had responsibility for
global security who, in turn, referred me to Mr. Ron DeLia, about
which I have explained in detail in my written testimony.
In my two or three conversations with Mr. DeLia over the
ensuing weeks and months, I learned that checking telephone
records was a standard investigative technique at HP, and that they
were drawn from publicly available sources.
The first leak investigation from April to August 2005 failed to
identify those responsible, but major new leaks occurred in
January, 2006. These involved another publicly traded company,
CSC, whose stock price may have been impacted by as much as
8 percent.
This raised the possibility of securities law violations. Mr.
Hurd and I concurred that a renewed investigation was in order.
Ms. Baskins advised on this matter from the start. I recommended
that the company use an outside firm such as Kroll Associates to
perform the investigation. However, Ms. Baskins felt strongly that
the investigation should be performed by Kevin Hunsaker, who
reported to her and who had responsibility for business conduct
and ethics investigations.
Mr. Hunsaker brought in the same underlying investigative
team, including Mr. DeLia, in the second investigation as had been
used in the first when Mr. Huska was involved.
His final draft report was distributed to me and Mr. Hurd in
mid-March.
Throughout the process, as detailed in my written testimony, I
requested and received assurance that the investigation was being
performed in the HP standard way, legally, and properly. That this
was the case was reiterated in Mr. Hunsaker's final report.
In April, the report was reviewed by Mr. Sonsini and the
Chairman of the Board's Audit Committee, who presented a
summary of the report, which identified the director responsible for
the leaks to the Board in May.
In late June, I became aware from Mr. Sonsini that former
director Tom Perkins had raised concerns with him about the
investigation a month or so after he had resigned from the HP
Board. Mr. Sonsini attempted to allay Mr. Perkins' concerns after
consultation with Ms. Baskins, concluding, in a January 28th e-mail
that "the process was well done and within legal limits."
In late August, 2006, Mr. Sonsini advised the Board that its
techniques were "not generally unlawful."
I am neither a lawyer nor an investigator, and in this matter, I
relied on the expertise of people in whom I had full confidence
based upon their positions with the company and my years of
experience in working with them.
I deeply regret that so many people, including me, were badly
let down by this reliance.
I would like you to know that I was a full subject of this
investigation and I too was pretexted.
Based on my experience, I hope that Congress will help
companies like HP and people who find themselves in my position,
as well as the targets of investigations, by establishing bright line
laws in this area.
In addition to protecting privacy, I hope that Congress enacts
legislation to help companies protect themselves from threats
arising from serious or repeated breaches of confidentiality through
sanctioned legal means perhaps through investigations that can be
conducted by the SEC.
I appreciate the opportunity to appear before you and I look
forward to your questions.
[The prepared statement of Patricia Dunn follows:]
PREPARED STATEMENT OF PATRICIA DUNN, FORMER CHAIRMAN. OF
THE BOARD, HEWLETT-PACKARD COMPANY
MR. WHITFIELD. Thank you, very much, Ms. Dunn.
At this time, Mr. Sonsini, you are recognized for 5 minutes for
your opening statement.
MR. SONSINI. Thank you, Mr. Chairman, members of the
committee. It is an honor to be asked to appear before you today.
I want to thank my client, Hewlett-Packard, for authorizing me to
answer your questions. I, therefore, believe that I can address the
issues presented by these hearings without violating any
confidentiality obligations that I have to them.
First, let me explain my law firm's role in these matters. We
were not involved in the design. We were not involved in the
conduct of the so-called Kona 1 or Kona 2 investigations. Indeed,
I was not even aware of them when the investigations were being
conducted.
Hewlett-Packard asked my law firm to provide legal advice to
the Board of Directors after the investigations had occurred.
With respect to the subject of your hearing, in my opinion, the
use of pretexting and similar intrusive investigative methods in
these circumstances is plainly wrong. They should not be used by
businesses or others no matter what the purpose. I know this as
well as anyone since public reports have indicated that my own
records may have been obtained using pretexting in this
investigation.
When we were asked by the Hewlett-Packard Board of
Directors to investigate the matter, we told the Board that although
generally pretexting except in the instances of financial institutions
was not specifically unlawful, we could not confirm that the
methodologies used in the investigations were legal.
It seems to me that a positive outgrowth of the recent troubles
at Hewlett-Packard would be passage of legislation governing such
conduct. Although pretexting is clearly wrong, unethical and
improper, the law is not as clear as it needs to be. As Mr.
Chairman said in his opening statement, it is probably illegal. We
need to make it clearly illegal.
Having said that, the importance of preserving confidentiality
within the Boardroom should not be minimized. The dominant
trend in corporate governance in recent years has been to enhance
the role of boards of directors, the role of not only oversight, but
also the obligation to monitor management. Boards across the
Nation have risen to this challenge. But a board cannot function
effectively to safeguard the shareholders' interests if its most
sensitive deliberations are leaked to outsiders. A board's duty of
deliberation, a board's duty of care, a board's duty of candor is
greatly weakened without confidentiality.
Finally, in all the recent coverage about the disputes within
Hewlett-Packard, I feel that some have lost sight of the underlying
greatness of the company involved. The mistakes made in
handling the investigation--and there were mistakes--do not alter
the fact that HP remains a company that we can all be proud of. I
look forward to answering your questions to the best of my ability,
and thank you again for this opportunity to make this statement.
MR. WHITFIELD. Thank you, Mr. Sonsini.
[The prepared statement of Larry Sonsini follows:]
PREPARED STATEMENT OF LARRY W. SONSINI, CHAIRMAN., WILSON SONSINI GOODRICH
& ROSATI
MR. WHITFIELD. And Mr. Adler, you are recognized for 5
minutes.
MR. ALDER. Good morning. Good morning, Mr. Chairman
and members of the committee. My name is Fred Adler. I am
with HP IT Security Investigations, and I am here at the invitation
of the committee. No subpoena was required to compel my
attendance. My fellow employees and colleagues at
Hewlett-Packard have encouraged me to attend this hearing as
have my employers. I believe, as do my friends at
Hewlett-Packard, that the company has a tradition of being an
outstanding and ethical member of the community. With the
recent public disclosure of possible inappropriate conduct, I am
sure that Hewlett-Packard will become a stronger company. I will
be proud to continue to work there.
In order to assist the committee in evaluating my testimony, I
would like you to know my background.
I spent 28 years working for the California Attorney General's
office, Department of Justice, and retired before joining
Hewlett-Packard.
The last 13 years at the Department of Justice, I served as a law
enforcement officer. The last 7 years of my service, I was assigned
to the Sacramento high technology crimes task force responsible
for investigating computer-based criminal activity.
I joined HP after my retirement knowing that many of the
people I would be working with at HP were former colleagues who
had outstanding careers in law enforcement investigating
technology-related issues.
In the time that I have worked for the company, we
successfully protected the company, its customers, and vendors
from criminal activity.
When requested, we have also assisted law enforcement in
investigating crimes when our particular expertise was needed.
I am proud of our record and of our relationship with law
enforcement. I am proud of the ethical standards that the company
has set and my maintaining those standards.
Because of the pride I take in our company, earlier this year I
became uncomfortable when I learned of investigative techniques
being used by certain members of the unauthorized disclosure
investigation team with whom I worked during the investigation of
leaks to the press. Those leaks had divulged important corporate
information.
In order to appreciate concerns that arose during the
investigation, one must understand the legal issues surrounding the
collection of relevant information.
People who work at Hewlett-Packard, as at other corporations,
sign a user agreement which permits the company access to data
which resides on the company network.
This includes data on desktop computers, laptop computers,
e-mail accounts, servers and also includes corporate telephone
records.
If so, tasked and specifically authorized, I have access to those
accounts and can track the pertinent calls, e-mails and contacts for
investigative purposes.
In that process, it may be helpful to know the phone numbers
or e-mail identity of the employee or corporate officer or other key
persons.
The information we use to make our inquiries must comply
with legal standards. If we wish to obtain third party data, we
must, and do, comply with the law. As a result of our law
enforcement experience, we usually know what standards apply.
In this instance, when we grew concerned that legal standards
may not have been met in obtaining personal phone records, a
coworker and I brought the matter to the attention of our managers.
My manager, a former law enforcement officer, appreciated our
concerns and raised them with counsel. We were all subsequently
assured by counsel everything being done met both Federal and
State legal standards.
We were advised that this opinion was a result of a review by
at least two attorneys.
I understand those opinions have since been questioned. I am
not an attorney, and I can't pass judgment on that issue. I do
believe as a former law enforcement officer, that it is important
that the law be as clear--be clear, so everyone knows it has its
limits.
If the problem that brought us here today starts the process of
clarifying the law, some good will have will occurred. HP and its
exceptional employees will get past this difficult period. It is a
strong company with loyal customers and clients.
In the meantime, I am pleased to assist the committee by
answering questions and providing information, particularly if it
helps in passing legislation which will clarify the law. Thank you.
[The prepared statement of Fred Adler follows:]
PREPARED STATEMENT OF FRED ADLER, IT SECURITY
INVESTIGATIONS, HEWLETT-PACKARD COMPANY
Mr. Chairman and Members of the Committee, my name is
Fred Adler, HP IT Security Investigations, and I am here at the
invitation of the Committee. No subpoena was required to compel
my attendance. My fellow employees and colleagues at Hewlett
Packard have encouraged me to attend this hearing, as have my
employers. I believe, as do my friends at Hewlett Packard, that the
company has a tradition of being an outstanding and ethical
member of the community. From the recent public disclosure of
possible inappropriate conduct, I am sure that Hewlett Packard will
become a stronger company. I will be proud to continue to work
there.
In order to assist the committee in evaluating my testimony, I
would like you to know my background. I spent twenty-eight (28)
years working for the California Attorney General's Office,
Department of Justice, and retired before joining Hewlett Packard.
The last thirteen (13) years at the Department of Justice I served as
a law enforcement officer. The last seven years of my service I
was assigned to the Sacramento High Tech Crimes Task Force,
responsible for investigating computer based criminal activity. I
joined HP after my retirement knowing that many of the people I
would be working with were former colleagues who had
outstanding careers in law enforcement investigating technology
related crimes.
In the time I have worked for the company, we have
successfully protected the company, its customers and vendors
from criminal activity. When requested, we have also assisted law
enforcement in investigating crimes when our particular expertise
was needed. I am proud of our record and of our relationship with
law enforcement. I am proud of the ethical standards our company
has set and my maintaining those standards.
Because of the pride I take in our company, earlier this year I
became uncomfortable when I learned of investigative techniques
being used by certain members of the Unauthorized Disclosure
Investigative Team with whom I worked during the investigation
of leaks to the press. Those leaks had divulged important corporate
information.
In order to appreciate concerns that arose during the
investigation, one must understand the legal issues surrounding the
collection of relevant information. People who work at Hewlett
Packard, as at other corporations, sign a user agreement which
permits the company access to data which resides on the company
network. This includes data on desk top computers, lap top
computers, email accounts, servers and also includes telephone
records. If so tasked and specifically authorized, I have access to
those accounts and can track the pertinent calls, e-mails and
contacts for investigative purposes. In that process it may be
helpful to know the phone numbers or e-mail identity for the
employee or corporate officer and other key persons.
The information we use to make our inquiries must comply
with legal standards. If we wish to obtain third party data, we must
and do comply with the law. As a result of our law enforcement
experience, we usually know what standards apply. In this
instance, when we grew concerned that legal standards may not
have been met in obtaining personal phone records, a co-worker
and I brought the matter to the attention of our managers. My
manager, a former law enforcement officer, appreciated our
concerns and raised them with counsel. We were all subsequently
assured by counsel everything being done met both federal and
state legal standards. We were advised that this opinion was the
result of a review by at least two attorneys.
I understand those opinions have since been questioned. I am
not an attorney and can't pass judgment on that issue. I do believe
as a former law enforcement officer that it is important that the law
be clear so that everyone knows its limits. If the problem that
brought us here today starts the process of clarifying the law, some
good will have occurred. HP and its exceptional employees will
get past this difficult period, it is a strong company with loyal
customers and clients. In the meantime, I am pleased to assist the
Committee by answering questions and providing information,
particularly if it helps in passing legislation which will clarify the
law.
MR. WHITFIELD. Thank you, Mr. Adler, and we appreciate all
the testimony of all the witnesses. Ms. Dunn, I think all the
evidence and documents and even your testimony show that as
Chairman of the Board of Hewlett-Packard, that you were certainly
involved in this investigative process.
And you had mentioned in your opening statement that you
thought these phone records were publicly available, that they were
just available to the public.
I was just curious, I know you have had a broad range of
experiences and have been quite successful in your corporate life
and--but, what, where did you feel like, that people could obtain
phone records and private information like that publicly?
MS. DUNN. Mr. Chairman, I did not know where this
information could be found publicly. But, I was aware that the
kinds of investigations done by Mr. DeLia had previously been
based on solely publicly available information.
In the context of my understandings from all of those whose
representations I trusted, I took the understanding without any
question, and I understand why that might seem strange today,
knowing what I know now, but that was my state of mind at the
time.
MR. WHITFIELD. Now, Mr. DeLia, in some of his documents,
which I won't ask you to turn to right now, but he stated that back
in 2005, in discussions with you and others, that he discussed the
methodology of pretexting and what that was all about. Do you
recall a discussion with him back in 2005 about the subject of
pretexting?
MS. DUNN. I have no recollection of a conversation with Mr.
DeLia that included the word "pretexting" or anything about the
misrepresentation of identity to obtain phone records. In fact, the
first time the word "pretexting" entered my consciousness was at
the time when Mr. Sonsini began responding to Mr. Perkins'
concerns in late June of 2006. The word, as some members of this
committee have already said in their statements, is not one that was
commonly understood as to its meaning, or certainly its potential
illegality.
MR. WHITFIELD. Now, when Mrs. Baskins was on the panel, I
asked her about some notes that she made on June the 15th of 2005.
And in her notes--and this is in Exhibit 124 of the exhibit book--
these are notes of Mrs. Baskins, and the very first note says,
"Obtaining phone numbers is a time-consuming process. Call
carriers, Nextel, Sprint, and use pretexting to extract the
information." And then they have your initials down here of
questions that you asked.
Do you recall being at the meeting reflected in the notes of Ms.
Baskins back in June of 2005 about pretexting?
MS. DUNN. I do not recall being in that meeting. I assume it
was a telephone meeting, but I do not know. She may have been
passing along questions from me, but I don't have a recollection to
report to you.
MR. WHITFIELD. So your comment to this committee, then, is
that the first time you really heard the word "pretexting" or
understood what it meant was in Mr. Larry Sonsini's e-mail in
June of 2006?
MS. DUNN. That was the first time that the word jumped out at
me. And it was within days or certainly weeks that I began to
understand that pretexting could involve the fraudulent
misrepresentation of identity. That was not something that I had
understood until that point.
MR. WHITFIELD. Because as I mentioned to you earlier in
Exhibit 115, Mr. DeLia, in an interview conducted by the law firm
of Wilson Sonsini on August 21, 2006, he said himself that he had
no doubt that he had discussed the methodology of pretexting,
including impersonation, with you; but your testimony is you
simply don't recall that or are not familiar with it; is that correct?
MS. DUNN. Well, at minimum I don't recall it. I don't agree
with Mr. DeLia's testimony.
MR. WHITFIELD. Okay. Now, Mr. Sonsini, I know that you're
one of the most respected attorneys in the Silicon Valley. And I
know that your expertise is not criminal law, and I know that some
of these documents, as we went through this process of Kona 1 and
Kona 2 and why your firm was not really involved in it, here say
you had sent some e-mails or made some comments that it
appeared to be proper what was going on, is that correct?
MR. SONSINI. Yes, it is, Mr. Chairman. I believe you're
referring to an e-mail exchange with Mr. Perkins, and you--if you
would like, I'd like to elaborate on that.
MR. WHITFIELD. Go ahead.
MR. SONSINI. Well, at the time Mr. Perkins inquired of me
through the e-mail what was going on. I think it's important to
note that I, too, at that particular point in time did not understand
pretexting, it's not an area of my expertise. I immediately turned
to Ms. Baskins and Mr. Hunsaker. I said, we should tell
Mr. Perkins what was going on; he was the director at the time of
the investigation. And I said, what can you tell me to respond to
him?
I got a detailed written response from Mr. Hunsaker telling me
what was done and what was lawful. I got a confirming response
from Ms. Baskins. And as my e-mail indicated, I then took that
information and immediately went to Mr. Perkins and I said to
him, here is what I've been told. And I said: it appears based upon
the repeated assurances that I was given, that what was done was
within legal limits. And that was the extent of my communication
with him.
MR. WHITFIELD. Now, did either one of you--are you aware of
any document prepared by legal counsel within Hewlett-Packard
about the legality or illegality of pretexting? And, Ms. Dunn, did
you receive a legal document explaining that pretexting was legal?
MS. DUNN. I never received a formal legal opinion, but in Mr.
Hunsaker's final draft report of March 14th on the investigation, as
was also contained in the final report in May, he made it very
clear, after laying out all of the investigative methods, that each of
them were legal and proper and in conformance with the standard
investigative techniques that the company had been using for
years.
MR. WHITFIELD. Because I tell you, from our review of the
documents--and there have been a lot of documents--we've
determined that the only legal opinion ever given was by the
attorney for the private investigator in Boston, what was his name?
Ron DeLia. He--John Kiernan was the attorney's name, and that
he wrote an opinion saying that pretexting was legal. And in
further analysis, we've determined that actually a law clerk wrote
that opinion. So it would appear that Hewlett-Packard, at the very
highest levels, relied upon a document prepared by a law clerk
hired by the private investigator saying that pretexting was legal;
that's what it looks like.
MS. DUNN. I think you'll also find in the documentary
evidence that there was a memo to the effect that pretexting,
indeed, all the investigative techniques used in this matter, were
legal. I was not familiar with the second opinion, if they may be
termed--
MR. WHITFIELD. Which e-mail is that that said it was legal?
MS. DUNN. It has not been produced by the company.
MR. WHITFIELD. Oh, it has not been produced by the
company? Oh, okay. Well, did you have it at the time; or when
did you receive that?
MS. DUNN. I need to refresh my memory on the date of that,
and I would be happy to come back to you with that answer.
MR. WHITFIELD. If you would turn to document 83. And if
you would look at that and tell me, is that the document that you're
referring to?
MS. DUNN. In which section, sir?
MR. WHITFIELD. The large book, document 83.
MS. DUNN. May I have a moment to review this?
MR. WHITFIELD. Sure. You don't recognize it right off?
MS. DUNN. This was a memorandum from Mr. Hunsaker to
Mr. Gentilucci and Mr. DeLia. It says it's prepared at the direction
of counsel--
MR. WHITFIELD. The only question I was asking is, is this the
document that you relied upon that showed that pretexting was
legal? That's all I want to know.
MS. DUNN. I do not recall seeing this e-mail before this
moment.
MR. WHITFIELD. Okay. Just one other brief question, and then
we'll move on.
Mr. Sonsini, I want to ask you this: California Penal Code
538.5 reads as follows, that it prohibits fraudulently obtaining
information from a public utility--and as I understand it, that in
California a public utility is considered a phone company, among
other things--that this statute makes it unlawful for any person to
transmit or cause to be transmitted by means of wire, radio, or
telephone 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, customer records, billing
records, customer credit data or accounting data by means of false
or fraudulent pretenses, representations, impersonations or
promises. That almost seems like it definitely is right on line with
what we're talking about.
MR. SONSINI. No doubt, Mr. Chairman. Although I'm not an
expert or familiar with that statute, we did do, when we
investigated the legality of the investigation, conclude that
methods may very well have been used which implicated that
statute.
MR. WHITFIELD. Okay. My time is expired.
I recognize the gentlelady from Colorado for 10 minutes.
MS. DEGETTE. Thank you, Mr. Chairman.
Ms. Dunn, you have been involved in the corporate world for
over 30 years, as near as I can see, is that correct?
MS. DUNN. That is correct.
MS. DEGETTE. Have you ever had occasion to request or direct
this type of investigation into corporate officers or employees
before?
MS. DUNN. Nothing of this kind. And if I may, I would like to
correct the record, as is contained in my written testimony, that I
was not the person who hired Mr. DeLia--
MS. DEGETTE. Okay, I understand that. But you were the one
who requested the investigation, correct?
MS. DUNN. At the--I was operating as a Nonexecutive
Chairman--
MS. DEGETTE. Yes, I know that.
Now, I want to ask you, Mr. Sonsini--and I apologize, I don't
mean to be short, but I only have 10 minutes.
Mr. Sonsini, I want to ask you because you are one of the most
prominent Silicon Valley lawyers. We've even heard of you in
Colorado. My question to you is as outside counsel for many of
these corporations, is this standard business practice in the industry
where leaks or other kinds of breaches are suspected to have
investigations of this type? Is this something you have dealt with?
MR. SONSINI. I have never dealt with an investigation of this
kind of a board of directors with respect to a leak of confidential
information.
MS. DEGETTE. Have you ever seen any kind of investigation
of confidentiality leaks, whether board of directors or other types
of employees of a corporation, where you have pretexting, have
you ever seen that?
MR. SONSINI. I have not, to my knowledge.
MS. DEGETTE. Have you ever seen investigations that
involved going through trash of corporate officers, directors or
employees?
MR. SONSINI. Not to my knowledge.
MS. DEGETTE. Have you ever seen investigations come up
with fake employees in order to get information from reporters?
MR. SONSINI. Not that I have knowledge of.
MS. DEGETTE. So this is news to you as well.
MR. SONSINI. Yes, ma'am.
MS. DEGETTE. Now, Mr. Sonsini, as outside counsel to HP,
were you briefed or were you consulted about the scope of this
investigation and the methods used?
MR. SONSINI. No.
MS. DEGETTE. Were you provided with the draft of the
investigation report, which is dated on March 10, 2006? It's in
Tab 72 of our notebook.
MR. SONSINI. I think you're referring to a report I'm familiar
with; yes, it was provided to me on or about April 6 of 2006.
MS. DEGETTE. Okay. On page 3 of that report it says, they're
talking about the procedures that they used, and they talk about
obtaining--obtained, reviewed and analyzed HP and third-party
phone records to identify calls made to or from reporters or other
individuals of interest. And then there is a footnote that says the
investigation team utilized a lawful investigative methodology
commonly utilized by entities such as law firms.
Did that raise any red flags to you?
MR. SONSINI. Well, I remember it, and I certainly did focus on
that footnote.
At the time I had the report, of course, I was asked to deal with
the issue in the Boardroom, what do we do with Mr. Keyworth? I
wasn't asked at that time to investigate the investigation, and I'm
certainly not an expert in such matters, so it wouldn't have been
sent to me.
MS. DEGETTE. But you said you focused on the footnote.
Were you concerned about what those techniques were to obtain
the phone records?
MR. SONSINI. I was concerned by the scope of the
investigation as evidenced by the report, and I did focus on that
footnote.
MS. DEGETTE. And what did you do about your concern?
MR. SONSINI. At that point in time I did nothing further. I had
discussions with Ms. Baskins. I asked her about the performance
of the investigation and its legality. I asked her, did you rely upon
experts, did you get legal advice, did you research it, and I was
assured that they did.
MS. DEGETTE. It sort of seems to us up here like it was kind of
circular reasoning, because Ms. Dunn says, look, I was just asked
to stop the leak, but I wasn't in charge of the actual conduct of the
investigation, right, Ms. Dunn? Is that correct?
MS. DUNN. I did not supervise this investigation. I initiated it
at the request of the Board.
MS. DEGETTE. So then General Counsel Ms. Baskins, who
unfortunately is not testifying, she talks to her experts, and they
say, well, this is all okay. Then she asks you, and then you're
relying back on Ms. Baskins; is that right, Mr. Sonsini?
MR. SONSINI. No, she never asked me. At the time I got the
report, I was not asked about it whatsoever.
The fact is this investigation was conducted by the
Hewlett-Packard legal department. They took the responsibility
on. I learned of it after the fact, after it occurred. And it wasn't
until the Board of Directors asked me to investigate it that I was
able to get into the legality of the conduct.
MS. DEGETTE. Okay. Let me move on a little bit.
And I want to ask you, Ms. Dunn, about something else that
happened which I think is just almost as bad as the pretexting, and
that's the creation of this fictitious character named Jacob. Jacob
was a fictitious employee of HP who was designed principally to
find out about the potential sources of an outside reporter named
Dawn Kawamoto. Now, you're familiar at least now with this
operation, correct?
MS. DUNN. Yes, I am.
MS. DEGETTE. Do you know, is it common practice for HP to
create fake disgruntled employees to sting outside reporters?
MS. DUNN. I do not know what normally goes on except what
I have been told.
MS. DEGETTE. Did you ever hear about that type of operation?
MS. DUNN. It would not come to my attention if it were the
case. As a nonemployee, nonmanager, outside director, I really
can't answer your question in the way I think you need it to be
answered.
MS. DEGETTE. Well, except for you're the one that ordered the
investigation, right?
MS. DUNN. I initiated it at the request of the Board as
Nonexecutive Chairman. And I would like to just add, this is an
unusual position in corporate America. Less than 9 percent of
companies have a position like this. I had no staff, no office, and I
reported only to the Board. The CEO doesn't report to me, nor do
any other people at HP.
MS. DEGETTE. I understand that. But if you take a look at Tab
60 in your notebook--actually, take a look first at Tab 21 in your
notebook, where Mr. Hunsaker says to Mr. Gentilucci, "We
DEFINITELY need to get the approval of Ann, Mark, and Pattie
before doing it"--and this would be the Jacob operation. You have
seen that e-mail, right?
MS. DUNN. I have.
MS. DEGETTE. And then you--if you will take a look at Tab
60, on February 22, 2006, Mr. Hunsaker sent you and Ms. Baskins
an e-mail that says, "Hi, Ann and Pattie, below please find the
e-mail we propose sending Dawn Kawamoto with the hope she
would forward it to George Keyworth.. I made up everything in
the side, trying to make it at least somewhat feasible.," and it
goes on, correct?
MS. DUNN. I recall the e-mail.
MS. DEGETTE. And you saw that at the time, too. So you
knew this operation was going on at the time.
MS. DUNN. I knew what--yes, I did. And--
MS. DEGETTE. And did you think there was any problem with
that, someone pretending to be someone named Jacob sending
e-mails to a reporter to try to get information from a reporter as to
a leak within the Board?
MS. DUNN. At no time in any part of this investigation was I
responsible for designing its methods.
MS. DEGETTE. Right. But you knew about--
MS. DUNN. I asked for this to be done in the HP standard way.
This did raise a concern to me. I did not want to be at any point
the person to whom the team turned for approval of specifics. The
way I responded was to say this is a management thing.
MS. DEGETTE. Okay. I understand that. But you ordered the
investigation, you knew these techniques were being used, you
developed a concern. What did you do about it?
MS. DUNN. I sent the team to management to get approval for
their techniques.
MS. DEGETTE. Who was that in management?
MS. DUNN. Mr. Hurd.
MS. DEGETTE. So do we have an e-mail or--
MS. DUNN. I think there is some evidence that he was aware of
this and--
MS. DEGETTE. Okay. What did you say to Mr. Hurd about
this Jacob situation?
MS. DUNN. I don't remember a conversation. I remember
telling the team that basically they had come to the wrong person
for approval, that was not my role in this matter.
MS. DEGETTE. So you knew this was going on, you're the one
that ordered the investigation, you had concerns, so your response
was to send them over to talk to Mr. Hurd, but you yourself didn't
mention it to anyone?
MS. DUNN. If I were going to have concern, it would have
been expressed to Mr. Hurd.
MS. DEGETTE. So did you express it to Mr. Hurd?
MS. DUNN. I asked him to look into it and to give his opinion.
MS. DEGETTE. And did you ever get an opinion from him?
MS. DUNN. I understand that he did give a--I don't know
whether it was verbal, an e-mail or by an in-person meeting, but
that they gained the approval they were seeking.
MS. DEGETTE. Okay. Mr. Sonsini, in this draft investigation
report, which you had said that you saw, Tab 72, a minute ago,
they talk about this Jacob situation on page 4 of that report, which
you saw. They said they engineered and executed a covert
intelligence-gathering operation. Were you familiar with that?
MR. SONSINI. No, ma'am.
MS. DEGETTE. So you didn't read that part--
MR. SONSINI. I read it, but I wasn't familiar with it. Other
than what was--
MS. DEGETTE. Did you have any concerns that HP might be
using a fake person to get information from a reporter?
MR. SONSINI. Congresswoman, at that time that was not my
focus that I was retained to do.
MS. DEGETTE. Thank you.
MR. WHITFIELD. The gentlelady's time is expired.
At this time I recognize Chairman Barton.
CHAIRMAN. BARTON. Thank you, Mr. Chairman.
I'm going to take my full 10 minutes, and I assume we will go
to recess to go have the votes on the floor?
MR. WHITFIELD. That's correct.
CHAIRMAN. BARTON. As soon as the bells stop, I'll start.
Well, first of all, I want to thank you three for not taking the
Fifth Amendment; it's good to have some people willing to answer
questions.
I want to start with you, Mrs. Dunn--or Ms. Dunn. You claim
that your position is one that is somewhat unique and that you
don't have direct staff. Who does report to you?
MS. DUNN. No one.
CHAIRMAN. BARTON. No one?
MS. DUNN. No one.
CHAIRMAN. BARTON. So you're purely an administrative
adjunct of the Board.
MS. DUNN. As part of my written testimony, I submitted the
job description for the Nonexecutive Chairman that was approved
by our Board. And it is very clear it's a coordinator role, it's a
facilitator role, it's a conduit--
CHAIRMAN. BARTON. You had no direct management--
MS. DUNN. No.
CHAIRMAN. BARTON. --responsibility? You are purely a
functionary of the Board?
MS. DUNN. I served at the pleasure of the Board.
CHAIRMAN. BARTON. Did you sit in on the Board meetings?
MS. DUNN. I chair the Board meetings--I did chair the Board
meetings until my resignation last week.
CHAIRMAN. BARTON. All right. Now, this whole investigation
got started because there were leaks from materials presented in
Board meetings, and perhaps leaks of discussions at Board
meetings; is that correct?
MS. DUNN. That is correct, sir. And in the submission, there is
a detailed chart of some of the leaks that were the most serious and
undermining to our company.
CHAIRMAN. BARTON. I appreciate that, but I don't have too
much time.
The Board was divided, or was the Board unified? Was the
Hewlett-Packard Board that you chaired a team that worked
together, or were there schisms on the Board and quite a bit of
controversy?
MS. DUNN. After I became Chairman, I became highly
cognizant of deep schisms between various individuals on the
Board.
CHAIRMAN. BARTON. So some of the Board members, or
member or members apparently took materials that were requested
to be confidential and disseminated without permission. What
steps did the Board take before you resorted to all of this sordid
detail to try to get the Board members to 'fess up'? Did you all
discuss it in the Board, and if so, did everybody put their hand on a
Bible and swear they weren't the leaks and--
MS. DUNN. Yes. The first inquiry into leaks actually began
under the administration of Carly Fiorina, who was Chairman and
CEO until February of 2005. She asked Mr. Sonsini to talk with
every director one-on-one about the functioning of the Board, and
to seek the confession of whoever the person or persons were that
were leaking this confidential information, as well as to reassert
their commitment to confidentiality going forward.
The reason why the Board, by the time I got involved, was so
deeply concerned was because they knew that no one had come
forward to admit their culpability.
CHAIRMAN. BARTON. How many Board members were there?
MS. DUNN. I believe there were nine independent directors at
that time, including myself, and two members of management--one
member until Mark Hurd arrived in April.
CHAIRMAN. BARTON. And did the Board take a vote to initiate
the investigation? How were you directed to start this
investigation?
MS. DUNN. I was directed in one-on-one conversations, about
which I have submitted my notes to this committee, by seven of
the nine directors that next to hiring or helping the Board to
identify its next CEO, my top priority was to help the Board come
to grips with these leaks. And I reported to the Board in my first
meeting as Chairman in March that I took that responsibility
seriously.
CHAIRMAN. BARTON. So 7 of the 11 Board members told you--
MS. DUNN. Seven of nine.
CHAIRMAN. BARTON. Told you individually, but there was
never a vote collectively to start this investigation.
MS. DUNN. There was never a vote collectively.
CHAIRMAN. BARTON. Was Mr. Keyworth one of the ones who
told you to start the investigation?
MS. DUNN. He was not.
CHAIRMAN. BARTON. He was not. So the first investigation
was Kona 1, was inconclusive; is that correct?
MS. DUNN. It was.
CHAIRMAN. BARTON. And Kona 1 did not use pretexting.
MS. DUNN. I believe it did use pretexting.
CHAIRMAN. BARTON. Did it use pretexting? Okay.
MS. DUNN. I'm sorry, I've just been corrected. I don't know.
CHAIRMAN. BARTON. All right. Well, that's a fair answer. I
don't know a lot of stuff either, and that's okay every now and then
to not know.
But when did it arise to your attention that pretexting was
being used? At what point, in which investigation?
MS. DUNN. Mr. Chairman, in the sense of the word that we're
all using pretexting today, which is the fraudulent
misrepresentation of identity, a form of identity theft, this was not
something I understood until early July of 2006 as a possible
component of either investigation.
CHAIRMAN. BARTON. Okay. Now, I just want to make sure that
we understand. We have a divided Board. Somebody on the
Board is leaking information that the people that are not leaking it
think is inflammatory. So there is kind of a general investigation
to get people to confess and stop their bad behavior. That doesn't
work, so a majority of the Board individually says: I want this
stopped, I want to find out who is doing this, and by golly you're
the Chairman of the Board, you start this investigation.
MS. DUNN. You work for us, we need this work done.
CHAIRMAN. BARTON. You go, apparently--do you clear this
with Mr. Hurd, the Chief Executive Officer, who is going to testify
next?
MS. DUNN. He was not with Hewlett-Packard in the period
when I was first named Chairman.
CHAIRMAN. BARTON. All right. Do you go to Mr. Adler down
there and say, I want you to do it? I mean, did you go to Mr.
Sonsini and say, I want you to do it--
MS. DUNN. No.
CHAIRMAN. BARTON. Who did you call to do it?
MS. DUNN. I went to Mr. Bob Wayman, who is the
long-serving CFO of Hewlett-Packard, arguably the CFOs' CFO.
CHAIRMAN. BARTON. Even though you had no direct
management responsibility, you went to the Chief Financial
Officer of the company.
MS. DUNN. He was a fellow director of the company, who, in
his role as a director and a fiduciary, was as concerned about these
leaks as any other director.
CHAIRMAN. BARTON. Is the director the same as a Board
member?
MS. DUNN. Yes, it is, sir.
CHAIRMAN. BARTON. So he was one of the Board members
who wanted to do the investigation.
MS. DUNN. He was one of the seven, yes, sir.
CHAIRMAN. BARTON. Okay. And is he the one responsible who
hired these outside investigators to do the investigation?
MS. DUNN. Not directly, but as noted in the reporting
relationships chart, he had control over all of the functions that are
involved in security investigations. He directed me to someone in
his organization who directed me to someone that does this work.
CHAIRMAN. BARTON. When these Board members asked you to
do this or told you to do the investigation, and when you went to
Mr. Wayman, who is also a member of the Board, was there any
discussion about--I mean, was this personal? Was this, we want to
get him whatever it takes, do what it takes? Or was it, we'd like to
know, but we don't really want to cross any boundaries?
MS. DUNN. There was never any question in my mind that the
Board expected this investigation to be done not only legally, but
ethically.
CHAIRMAN. BARTON. Well, if seven of the nine members
wanted the investigation, I would start with the premise that the
two that didn't were the primary suspects. Was any extra
consideration given to the two Board members who didn't want
the--I mean, it would seem to be they were the ones most likely to
be leaking information.
MS. DUNN. I did provide background to the investigators, as I
was told was the normal process in these matters, about who
wished and who did not wish to have an investigation. I, as I
mentioned before, was one of those six or so directors whom the
investigators decided was among the Board of Directors' likely
suspect. I saw myself as needing to be as independent of the
investigation as possible so that they could do their work without
the implication that I would not be considered.
CHAIRMAN. BARTON. Mr. Adler, what is your role in this?
What is IT Security Investigations? Is it a direct arm of
Hewlett-Packard, or is it on retainer by Hewlett-Packard?
MR. ALDER. Mr. Congressman, I am under a completely
separate entity within the Hewlett-Packard organization, and with
no common point of management until Mr. Hurd. My role was to
participate with regard to obtaining internal HP records, and to
participate in the investigation as required or as directed by HP
counsel, specifically Mr. Hunsaker. That may have included
interviews or any other technical assistance, computer forensics,
things of that nature.
CHAIRMAN. BARTON. So you're an internal investigatory arm
of Hewlett-Packard?
MR. ALDER. Yes, sir. In this particular time I was; sometimes
I functioned as the sole investigator, depending on the
circumstances and where jurisdiction of the investigation falls
under.
CHAIRMAN. BARTON. Mr. Chairman, my time is expired, and
we have to go vote. I just have one final question.
If I called you up, Ms. Dunn, and said, I'd like your phone
records for the last 6 months, I'm Chairman Barton of the Energy
and Commerce Committee, but I'd like to look at your phone log,
would you give me that?
MS. DUNN. If I understood why you wanted it--
CHAIRMAN. BARTON. No. I call you up; would you give me it,
your phone records?
MS. DUNN. In your position? I would give you my phone
records.
CHAIRMAN. BARTON. Praise the Lord. I wouldn't give you
mine.
MS. DUNN. I hope that doesn't mean you have something to
hide.
CHAIRMAN. BARTON. I wouldn't give them.
Now, if I get with former Chairman Dingell, and he and I say
we have reason to believe that we have an official right for the
public to know your records, I can sign a subpoena as Chairman of
this committee, with Mr. Dingell's acquiescence, and I can get
your phone records, but I have to sign an official document. And
I'm doing that in an official capacity. And I don't do that very
often, I take that very seriously. I don't issue many subpoenas.
But if I just want to peruse your background, I can't do that as an
individual citizen, and I shouldn't be allowed to without your
permission. And in this investigation, at some point in time people
very high up in your company either didn't ask the right question
or ignored it, because there was such a motivation to find out who
was leaking.
Nobody condones the leaks. We have leaks in this committee,
but the--
MS. DUNN. Mr. Chairman, may I make a comment on Mr.
Barton's--
CHAIRMAN. BARTON. And I'm going to have to go. But this
whole issue of pretexting is--we understand the right of
confidentiality in a boardroom and the right to conduct a private
investigation. This committee is concerned because the use of the
pretexting ignores what most people think is right and wrong--
MS. DUNN. I understand that, sir.
CHAIRMAN. BARTON. That's our problem.
MR. WHITFIELD. Ms. Dunn, if you would hold your remarks.
The reason I say that is we have 1 minute and 20 seconds to go
vote on the House floor, and then we're going to have this floor,
and then three more votes at a maximum of about 5 minutes each.
So we're going to recess this hearing until about 1 o'clock, and
then we will all come back, and then you can make whatever
comment you would like to make at that time in response to
Chairman Barton. So we will recess until 1 o'clock.
[Recess.]
MR. WHITFIELD. The hearing will come to order.
I said we would be back at 1:00; it's 5 after, so we were 5
minutes late.
At this time, I recognize Ms. Schakowsky for 10 minutes.
MS. SCHAKOWSKY. I want to also thank the witnesses for
coming here today and being willing to testify; it really means a lot
to us.
And one other preliminary remark. I want to associate myself
with what Mr. Otter and Ms. Eshoo both referred to, because I
want to get at the culture that is taking place in boardrooms. But I
think that we as Members of Congress have to look at our own
culture here, too, and the issue of the processes that we have
worked in terms of NSA eavesdropping and getting phone records,
and the assertion of this administration that the ends in a sense do
justify the means, in this case terrorism, in your case a leak within
the Board of Directors. And I am concerned about both, that we
have ethical and legal processes that allow us to achieve very
laudable--or sensibly laudable goals anyway.
But I think it is significant for us to talk about this issue of
corporate culture. And I wanted to--Ms. DeGette was talking
about the e-mails on February 22, 2006, from Mr.--is it Mr.
Hunsaker--sent to you, Ms. Dunn, and Ms. Baskins about Jacob
and about Dawn Kawamoto, the reporter, et cetera. And when he
says, I made up everything on the sly, trying to make it at least
somewhat feasible, I won't quit my day job--he is being
light-hearted. While your response did say that you said as a
matter of course anything that is going to be potentially outside of
HP should have Mark's approval as well, et cetera. But you also
said, "Kevin, I think this is very clever." And I just wondered if
you would comment on that.
MS. DUNN. I will comment on that. I regret that comment; it
doesn't characterize my state of mind. I may have been trying in
some kind of, in retrospect, inappropriate way to tell the team that I
thought they were doing a good job. In reading that comment
today, it embarrasses me.
MS. SCHAKOWSKY. Thank you.
I also wanted to know--and it is Tab 29 in the book, a
PowerPoint that says that it was an initial briefing--
MR. WHITFIELD. Excuse me, Ms. Schakowsky. Do you have
the document book on the table?
MS. DUNN. It seems to not be here any longer.
MR. WHITFIELD. Could you bring the document book over,
please? Did you say document 29?
MS. SCHAKOWSKY. Tab 29, correct. And on page 10 of that
report, there are lists of either potential or ongoing investigative
methods that are being proposed in this investigation. And I just
wanted to walk through those a little bit and ask you if you had
approved them or heard about them, or if they went forward.
Under the title "Surveillance Intelligence Operations" it reads,
"Pre-trash inspection survey is in process for key subjects for the
investigation." And I wondered if you knew that HP investigators
were about to or were actually rummaging through the trash of
certain individuals?
MS. DUNN. The direct answer is no. The context is this was a
PowerPoint presentation that was given in a meeting room--
MS. SCHAKOWSKY. You did see that presentation?
MS. DUNN. I don't know that every page was actually shown.
I was interested in pages 12 and 13, which focused on the work
that had been done to try and legitimately hypothesize who within
our Board could be responsible for these confidentiality breeches.
So to answer the question, did I focus on, did I know? It's not
even clear to me that this was put up on the screen, and I do not
recall getting a hard copy of it.
MS. SCHAKOWSKY. And did you know if Mr. Hurd--do you
have any knowledge that Mr. Hurd knew about these activities?
MS. DUNN. I have no knowledge--I have no direct knowledge.
MS. SCHAKOWSKY. Okay. In this same document, and that is
Tab--I guess in this one, it says, "Surveillance activity was
conducted for G.K."--I guess that's George Keyworth--"speech in
Colorado on January 31, 2006."
Did you know that HP investigators were using HP money to
assemble surveillance teams for this Board member and possibly
press reporters at this point? And when did you know this, and
who approved of this expenditure?
MS. DUNN. I learned after this document, and I can't pinpoint
the date, but probably sometime after the release of Mr.
Hunsaker's report, that a security detail from Hewlett-Packard--
which normally attended company events, so not specifically for
the purpose of surveilling Dr. Keyworth--had reported nonetheless
back to their chain that he had, on a number of occasions, disclosed
confidential information orally to groups of employees who did not
have authority to hear that information.
So it's not clear to me now that there were, for example, details
of surveyors, surveillers to cover him specifically, but I am aware
now--have come to be aware that actually for several years there
were concerns among the security staff about his public comments,
and that they had reported some of them through the security
chain.
In terms of who approved the--if you would still like me to
answer that.
MS. SCHAKOWSKY. Well, I just wanted--it included
photographs of his home in Italy. Obviously trips were taken. We
know that Mrs. Keyworth was observed in Breeze Restaurant. The
family was also followed.
MS. DUNN. I was unaware of all of those activities until I read
about them in the press within the last week or two as these
documents started to find their way into the media.
MS. SCHAKOWSKY. And for reporters as well, you weren't
aware? Did you see the photograph of the reporter, Ms. Dawn
Kawamoto?
MS. DUNN. No. I would like to specify that I became aware
that reporters had been pretexted by Ms. Baskins on--I believe it
was September 6, it was a Wednesday evening of this year. That
was the first awareness that I had that reporters had been pretexted
as a part of this investigation.
MS. SCHAKOWSKY. Now, this PowerPoint--and I understand
that you're saying that you're not sure that all the pages were being
shown, but there is--on page 15 it talks about other investigative
options under review. We've got misinformation/sting scenario,
covert undercover operations, placement of agent in close
proximity of persons of interest, most likely location news
agencies.
And I guess what I'm trying to get at in this line of questioning,
is all of this really the HP way? I mean, it's pretty well detailed
out that whether or not--I'm not even talking about the legality
issues so much as kind of the sleaze factor here, and I'm just
wondering if none of this really came through to you over the
period.
MS. DUNN. Well, first I have to say that I never remember
seeing this piece of paper; it may or may not have been presented.
My view is that it wasn't--
MS. SCHAKOWSKY. Who failed you?
MS. DUNN. May I finish answering your first question?
MS. SCHAKOWSKY. Sure.
MS. DUNN. Thank you, Madam Congresswoman--I never
knew if I was Chairman or Chairwoman.
The fact is that I believe that these methods may, in fact, be
quite common not just at Hewlett-Packard, but at companies
around the country. Every company has a security department.
Every company of consequence has people who do detective-type
work in order to ferret out the sources of nefarious activities.
An example might be that at Hewlett-Packard one of the great
problems that it faces worldwide is called gray marketing, where
unauthorized agents for the company's products basically serve as
a conduit between the company and channels of distribution. It's a
huge problem. And I've heard about, in the Audit Committee of
Hewlett-Packard, how there are people in the investigations team
who actually pose as customers or pose as suppliers or pose--
MS. SCHAKOWSKY. As clerical workers in newsrooms, too?
MS. DUNN. That I never heard, but my point is--and I'll wind
up. But companies do a lot of this type of work to protect the
interests of our shareholders, and maybe we're all just coming to
be aware of how common it is.
MR. WHITFIELD. The gentlelady's time is expired.
At this time I recognize Mr. Walden for 10 minutes.
MR. WALDEN. Thank you very much, Mr. Chairman.
Ms. Dunn, I'm just having some trouble here tracking all this
based on what I'm reading in your document binders and what I'm
hearing today, and I want to go back to make sure I understood.
When we referenced the document that was in Tab number 24,
the handwritten minutes or notes of Ann Baskins from a meeting
of June 15th, as I recall your testimony earlier today under oath,
you said you didn't recall being in that meeting.
MS. DUNN. I have no recollection--
MR. WALDEN. No recollection.
MS. DUNN. I've seen this for the first time now.
MR. WALDEN. I'm not wondering whether you have seen this
for the first time. Do you remember being part of this discussion?
MS. DUNN. I do not.
MR. WALDEN. Then I would direct your attention to Tab
number 2. Tab number 2 is a copy of an e-mail message from you
to Ron DeLia in which you reference Kona. It is dated June 14th of
2005, the day before this meeting. In that--I'll read it. It says,
"Ron I would like to reschedule our call to include Ms. Baskins,
General Counsel at HP, in the next couple of days. Ann is now
involved in the confidentiality review, and it would be timely to
compare notes and discuss where to go from here. Can you do it at
2 p.m. Eastern Daylight Time tomorrow, Wednesday? And can we
use your conference line? Regards, Pattie."
June 14th, do you remember that e-mail?
MS. DUNN. I remember that e-mail, but without Ann's June
15th notes, which have just been put in front of me, my recollection
was incomplete. I haven't seen all the evidence here.
MR. WALDEN. I understand you may not have seen her notes.
My question was, do you have any recollection of having any
discussion with any of these people that you set the meeting up for
the next day?
MS. DUNN. I will say one more time, I do not recall the June
15th discussion. If I connect these dots, it took place, but as I--
MR. WALDEN. The importance of that is because there was a
discussion about pretexting that obviously went on in the meeting,
if Ann Baskins' notes are to be believed, I think you understand
the relevance of that to our discussion here.
MS. DUNN. I do.
MR. WALDEN. Let me move you to Tab 116, because this is a
document that includes interviews with you from August 21st,
interview with you conducted by Wilson Sonsini, who apparently
you are not willing to contradict Mr. DeLia's statement that he
shared with you the concept of impersonation to get records. And
I would note it says, and I quote, "Dunn thinks it was probable that
she was told in some circumstances that they may need to use false
pretenses, but that she was always assured that the methods used
were lawful and consistent with HP's practices." And if you go to
paragraph 26--
MS. DUNN. Could you point me to the number of the
paragraph?
MR. WALDEN. The top of the page is paragraph 25, but the
first notation is paragraph 26. It says, Schatz explained that Mr.
DeLia believed that he shared with Dunn the concept of
impersonation to get records. Dunn said she is not willing to
contradict Mr. DeLia on this. And then it goes on to say, "Dunn
thinks it is probable that she was told that in some circumstances
they may need to use false pretenses, but she was always assured
the methods used were lawful and consistent with HP practices."
Do you disagree with those findings?
MS. DUNN. I disagree with the transcription by Wilson
Sonsini's lawyer of our interview, and I was never given an
opportunity to review their notes.
MR. WALDEN. Do you disagree with the notion that you were
not willing to contradict Mr. DeLia's view of this?
MS. DUNN. I remember what I said to Mr. Schatz was that I--if
Mr. DeLia said this, I had no recollection of it. I don't recall
saying I am not willing to contradict him. That seems a
paraphrase.
MR. WALDEN. Mr. Sonsini, are you comfortable with what's
reported here?
MR. SONSINI. Yes, I am, sir.
MR. WALDEN. And do you believe that Ms. Dunn was made
aware of pretexting as a part of the investigation?
MR. SONSINI. I believe that the notes taken by Mr. Schatz, a
senior partner in our firm, a former U.S. assistant attorney and
Federal prosecutor, accurately reflects his recollection of that
interview.
MR. WALDEN. What does probable mean? Where he writes,
Dunn thinks it's probable that she was told that in some
circumstances they may need to use false pretenses?
MR. SONSINI. Well, I wasn't in the interview, of course,
Congressman, but I think--I shouldn't speculate on what that
exchange was.
MS. DUNN. I would like to try and interpret, if I may. I believe
I told Mr. Schatz that it was possible that I had seen the word
"pretext," not that there were false pretenses that I was aware of
and the fraudulent misidentification of identity as part of this
investigation. The word "pretext" does show up in documents that
I have been shown that I saw--
MR. WALDEN. So sitting here today under oath, you're going
to tell us you never knew that they were going to use these
techniques to spy on Board members and impersonation of others;
you just never knew?
MS. DUNN. It is my sworn testimony that until July of 2006, I
was unaware that the fraudulent misrepresentation of identity was
a part of the standard arsenal of HP tactics or used in this
investigation.
MR. WALDEN. In the document that we have here, the
interview of Ron DeLia, draft from Wilson Sonsini Goodrich &
Rosati--I believe it's document number 115--talking about Kona 1,
2005 investigation, and in number 4 on page 1, it says, "DeLia has
no doubt that he discussed methodology of pretexting, i.e.,
impersonation, with Dunn at some point during the 2005
investigation."
Mr. Sonsini, this is on your corporate--your law firm's
letterhead. Are you familiar with this document?
MR. SONSINI. I am, sir.
MR. WALDEN. And how should we understand that to be?
MR. SONSINI. That document reflects, sir, the investigation we
made and the information we received from the parties we
interviewed.
MR. WALDEN. Ms. Dunn, do you see why we're troubled by
this?
MS. DUNN. I do. I think there are also references in this
document to my request and ongoing, both seeking and receiving
of assurances that everything being done in this investigation was
legal and part of HP's normal investigative process--
MR. WALDEN. So if they told you it was legal to impersonate
someone to get documents, you didn't see a problem with that?
MS. DUNN. I never understood that to be the case, sir.
MR. WALDEN. Well, Mr. DeLia said he had no doubt he
discussed the methodology with you. And so what you're saying
is you don't believe him.
MS. DUNN. I wish he were here so we can talk about it.
MR. WALDEN. Ann Baskins' notes discuss that as well. Do
you dispute those?
MS. DUNN. I dispute having ever understood or being told that
the fraudulent use of identity was a part of this investigation. And
I would add that I had no reason to think that anything illegal was
going on. There were batteries of experts telling me that that was
not the case.
MR. WALDEN. And I understand that you were advised that
way, and some of those batteries of experts are now looking for
work, and I understand that. I guess my question--
MS. DUNN. I'm one of them.
MR. WALDEN. I understand that as well, and there may be
more after you leave here today.
My question is, you indicated earlier, and some of these
e-mails would indicate, that you signed off at--somebody--I don't
know if I got that e-mail where it says you--"Pattie and Ann gave
the thumbs up. Now we need to hear from Mark Hurd."
I guess my question is, you referenced earlier that you're sort
of there on the Board as an outside director. You're the one that's
sort of been tasked by seven Board members, without a vote of the
Board, to secretly put together Kona 1, Kona 2. There is a lot of
e-mail traffic back and forth.
You know, this April 19th memo to Ron DeLia from you says,
"Ron, let's call this Project Kona. Attached is the information we
discussed, the phone numbers of all those present at the meeting
referred to in the article." I mean, these would lead me to believe
that you were very involved in this. Even without a staff you were
pretty active. And my question is that the e-mail from Mr.
Hunsaker, which is under Tab 51, to team, from Kevin, Mr.
Hunsaker says, "This is a tentative go. I've attached a document
that purports to be an e-mail sent to Jacob about an announcement
taking place next week. Let's talk about the content on our call.
After that, Fred, can you begin to prepare the document for Cindy?
We cannot put this completely in motion until they clear it with
Mark, but Ann and Pattie have both given the thumbs up, so we
should be prepared to send it if Mark approves. Kevin."
Do you remember that e-mail?
MS. DUNN. I have read that e-mail. I don't agree with its
characterization of my giving it the thumbs up. I said it needed to
be approved by management.
MR. WALDEN. In another part of this interview on August 25th,
DeLia thought, page 3, "in all probability," quote, unquote, that he
used the word "pretexting" with Dunn and explained the term to
her, but did not have a specific recollection of using the word.
DeLia said he knows he would have described the processes with
Dunn, but he did not tell Dunn that he was using a subcontractor.
MS. DUNN. Sir, I am testifying here under oath; Mr. DeLia is
not. I think I will leave it at that.
MR. WALDEN. Well, I'm not sure we can leave it at that.
Answer my question about Mark Hurd's role about this. What was
his role? You have indicated--you kind of deferred to him--can I at
least finish asking the question, Mr. Chairman?
MS. DUNN. May I answer, sir?
MR. WALDEN. Yes.
MS. DUNN. The question was, what was his role?
MR. WALDEN. What was your understanding of his role in this
process?
MS. DUNN. That this particular element of the investigation
could not go forward without his approval.
MR. WHITFIELD. And I might add that more than likely we
will have a second round as well, so--Mr. Inslee, you're recognized
for 10 minutes.
MR. INSLEE. Thank you.
I want to ask about Tab 29, Ms. Dunn, about this document. I
think there has been some discussion about it already. It's
identified as Project Kona 2 HP. It says "Initial briefing, Pattie
Dunn" on it, on the title page. It's dated February 2, 2006. It's a
rather extensive document.
It's interesting in time. I introduced the first bill in Congress in
this session to make it clear and to have tools against pretexting on
January 31st. Two days later HP's involved in a very significant
effort that I think as we go through this will show substantial
willingness to defraud other people about the sources and how you
were obtaining information. The timing is pretty amazing to me.
But I want to ask you about this document. It has your name
on it. It is entitled "Project Kona 2," and on page 10, I believe--
excuse me, page--page 10 of the document, I'll give you just a
moment to get to page 10 there.
MS. DUNN. I was just asked to look at this page, so I'm
familiar with it right now.
MR. INSLEE. Now, this document, as I understand, was
something like a PowerPoint or a slide projection to use; is that
correct?
MS. DUNN. Yes, that's how I believe it was used. It was
projected during a meeting.
MR. INSLEE. And on the title page it says it's for you, you
were the subject, you were the audience of this document, this
presentation, I assume; is that correct?
MS. DUNN. I remember that the meeting took place, and Ms.
Baskins was with me. And, yes, I was the person who on behalf of
the Board was tasked with this investigation.
MR. INSLEE. So on page 10--are you with me there? Do you
have that in front of you?
MS. DUNN. I'm with you.
MR. INSLEE. It's entitled "Investigation Activity Update."
Now, I have to tell you, I was impressed with this document, with
its extensive list of activities. Surveillance, intelligence operations,
intelligence-gathering effort to document communications for all
pertinent subjects. Pretrash inspection survey is in progress for
key subjects. Presurveillance reconnaissance is in progress.
Surveillance activity was conducted--and there is a list.
Now, I want to ask you about this last one. It says, Feasibility
studies are in progress for undercover operations, clerical, in
CNET and WSJ offices in SF California. Now, I would
understand that to say that you were considering--undercover to
me is another way of saying that someone would be lying about
their status, that HP was considering a method of having a person
lie about their identity or their responsibility or their presence in
some fashion, and in this case it was to CNET and to the Wall
Street Journal.
And so if my interpretation is correct, it appears to me that you
had already stepped up over the line of being willing to falsify the
identity or the role or the responsibility of a person in order to
obtain this information; is that a fair statement?
MS. DUNN. I don't think that is a correct inference. I am not in
the mind or was not in the minds of the investigation team. What
they considered and what I saw are in many cases two different
things. I think you can probably appreciate what happens when
you go into a meeting and someone's got a 30-page PowerPoint
deck, and you've got limited time, and you say, let's get to the
meat of the matter here. I want to know who do you think did this.
Let's go to the analysis, what we know about who did this.
I remember focusing on pages 12 and 13--
MR. INSLEE. Today if any CEO in the land, if they see a
document that says we are considering undercover operations
against major media outlets in this country, don't you think that
should be a red flag to say, should we be doing undercover
operations to major media outlets? And undercover, to me that
means that someone is falsifying their identity or falsifying their
responsibilities. Are you telling us today had you been aware of
that, you would have stopped it? Or are you telling us that you
weren't aware of that? Or are you telling us that you missed that?
Or are you telling us that you thought it was okay to think about
undercover operations, and you would think about it later? Which
of those scenarios happened here?
MS. DUNN. What I'm telling you is that I don't believe I saw
this. I was not responsible for designing the techniques that
Hewlett-Packard uses in investigations. And I will strongly affirm
your statement that I advise--and I think that is what you just
asked--other CEOs--I was not the CEO, but I would advise CEOs
that if anyone in their organization came to them with this
proposal, that they take appropriate action to prevent it.
MR. INSLEE. So if anyone actually--what you're telling me is if
anyone in the chain of command saw this proposal, they should
have shut it down right there; is that a fair statement?
MS. DUNN. I think that this would have--this would have been
and should have been a trigger to review the investigative methods
at Hewlett-Packard from the standpoint of, say, an internal audit
review to look for, on a risk basis, what was going on there that
could put the company in jeopardy.
MR. INSLEE. So while I was introducing a bill on January 31st
to give us tools to stop pretext calling, which is an undercover
device to obtain our personal cell phone information, what was HP
telling Congress about whether or not we should have these tools
to stop pretexting? What were your lobbyists telling Congress?
MS. DUNN. I don't know, sir. I'm not involved in HP's
lobbying efforts; I have no role in approving or even being
informed about them.
MR. INSLEE. And what is HP telling Congress now? Should
we pass this bill that this committee passed back in March? What
is your advice to us now?
MS. DUNN. Sir, I think the right person to address that
question to is Mark Hurd, who is an executive of the company. I
am not, was never, and I have never been consulted about what HP
does in its lobbying efforts with Congress.
MR. INSLEE. Well, what is your personal opinion, if you have
one? Do you think Congress should give the tools to agencies to
stop pretexting Americans?
MS. DUNN. Absolutely. I think as a--here's what I think, and
this is in my testimony and my opening statement. I think that the
privacy of individuals needs to be protected with crystal-clear
laws. I also believe that companies like Hewlett-Packard need to
have a place where they can go to have investigations that are
necessary to protect shareholder interest, accomplished within
sanctioned safe harbors. Just like law enforcement carves itself out
from pretexting laws, there needs to be a way for companies to do
the kind of investigations they need to protect intellectual property
and, in this case, repeated, unconfessed serious disclosure of
confidential company information.
MR. INSLEE. And do you have any information as to why the
United States House of Representatives, having had a bill passed to
solve this problem, introduced the same time that this was going on
at HP, why the leadership of this House, do you have any
information, won't schedule a vote on this bill? Do you have any
information why that is? Because, frankly, it is a mystery to me. I
have checked with the Intelligence Committee. They said we
don't have a hold on this bill. I asked my friends across the aisle.
No one admits to having a hold on this bill. And I have to tell you,
my constituents are tired of a Congress with backroom holds put
on bills by secret--I don't know who they are--trying to stop this
scandalous behavior that's going on. So I wonder if you have any
advice about what is stopping Americans from getting this
protection?
MS. DUNN. Sir, if there's anything I know less about than the
details on the law on pretexting or the methods that are permissible
in investigations, it's how the U.S. Congress passes bills.
MR. INSLEE. Well, in this case, how they don't pass bills.
MS. DUNN. Or how they don't pass bills.
MR. INSLEE. That's the situation.
MS. DUNN. But I would be happy to talk off line about what I
can do, if anything, to help you in that matter.
MR. INSLEE. Well, I hope corporate America, responsible
corporations, of which there are millions and millions, thankfully,
in this country, will call Republican leadership in the House of
Representatives and tell them to get this bill up on the suspension
calendar and pass it. I have some suspicion that maybe those calls
aren't being made. Maybe they are calls with a different message
to GOP leadership.
I don't know what's going on here, but I hope that responsible
corporate leadership will help us pass this bill. And I hope the pain
that HP is going through today helps that message to get delivered.
Thank you.
MS. DUNN. Thank you.
MR. WHITFIELD. The gentlelady from Tennessee is recognized
for 10 minutes.
MRS. BLACKBURN. Thank you, Mr. Chairman. And thank you
to all of you for your patience today.
Ms. Dunn, to you first, please, ma'am. The document that you
submitted to us with your testimony on your duties of the
independent chair, it's under Tab 3, I want to go, if we can, to that
document for a couple of questions for clarification for the record.
First of all, you have said that you were the--your duties as the
Chairman, and you've defined how unusual those duties were. But
for the record, you were compensated for those duties. You were
compensated for your Board membership and then compensated
for your duties, and most of that you took in HP stock, correct?
MS. DUNN. That is correct. If you would like, I'll give you
some details on that.
MRS. BLACKBURN. Yes, I would.
MS. DUNN. I began as a director at Hewlett-Packard in 1998. I
was required by the company I worked for to renet I think 25
percent of my director's fees in cash. So I took 75 percent in stock
and 25 percent in cash.
By 2002, I was able to take 100 percent of my director's fees in
stock. I have received small cash stipends for chairing committee
meetings along the way; I would say in 8 years, probably a total of
$50,000 or less as a committee chairman and committee fees,
which are extra.
MS. DUNN. And in September, I believe in 2006, for 6 months
the compensation committee at HP basically forced me to accept
an additional $100,000 of compensation which I take in stock
which are for my duties as Chairman. The reason I turned it down
was because I thought this was a responsibility that ought to rotate
among the directors and that ought to be done on the basis of the
needs of the company.
MRS. BLACKBURN. I want to go down on this, duties of the
independent chair, and the first cell in this chart is flow of
information to the Board. And in this, you state that you oversee
the flow of information, including the quality, quantity and
timeliness from management to the Board, and I will have to tell
you, it is a--when you read the Kona report that is under Tab 29
that we have, and I think several of us are going back to page 10 in
that report, it does lead me to ask, did you make decisions of
holding back information about the pretexting, or did you decide to
leave things off the agenda? Were there portions of the report that
you chose to share and portions that you did not? Would you like
to clarify that?
MS. DUNN. Thank you for giving me the chance to do that.
One of the pieces of advice that I received earliest in this process
from the investigative team was that if those who are being
investigated, including myself, know all of the details about how
they are being investigated, you no longer have a valid
investigation.
So my approach to balancing my responsibilities to inform the
Board and not compromise the investigation was to report to the
Board at every regular meeting between the time that the first
investigation began and ended that an investigation was underway,
so--
MRS. BLACKBURN. So you basically distilled the information
and then brought forward what you felt was appropriate?
MS. DUNN. Especially that they had to know I had responded
to their request and I was taking steps.
MRS. BLACKBURN. Okay, the last cell in your duties of the
independent chair, the CEO evaluation, was the Kona project
included in Mr. Hurd's evaluation?
MS. DUNN. It was not.
MRS. BLACKBURN. So it was never referenced--
MS. DUNN. Never.
MRS. BLACKBURN. In the evaluation. What about for his
predecessor?
MS. DUNN. Never.
MRS. BLACKBURN. Never. So it was never mentioned, it was
totally off the record, off the book?
MS. DUNN. Well, let me say that with respect to Ms. Fiorina's
reviews, I don't know that they were ever written. If they were I
was never privy to them. But I have no reason to think that
anything related to investigating Board leaks was ever a part of the
review process with her. And the same is true for Mr. Hurd. And
as important as this matter is to us now, I will tell you that this
never rose to the level of significance to focus on as a matter of
performance by our Board the last time he received a review.
I suspect it will the next time.
MRS. BLACKBURN. You had mentioned and testified earlier in
response to Chairman Barton's question that it was your intention
that the investigation be carried out ethically or legally and in the
Kona report on page 10, you--in talking about this, the report that
was given to you, contact established covertly with DK, a
nontraceable Hotmail e-mail account, a dialogue has been
established further planning of this operation is in progress.
Does that sound like it is ethical? Do you believe that to be an
action item that would be ethical?
MS. DUNN. That rang a bell with me, which is why just as in
every other case, I did not see myself as the right person to approve
methods. I am not in charge of investigations at Hewlett-Packard.
I referred the matter to management.
MRS. BLACKBURN. Mr. Sonsini, when was the first time that
you heard anything about this investigation?
MR. SONSINI. The first time I heard about the Kona 1 and
Kona 2 investigations, I believe was a note I received from Pattie
Dunn on or about March 15th of this year.
MRS. BLACKBURN. So it would have been prior to the June
19th e-mails that are in here?
MR. SONSINI. Yes.
MRS. BLACKBURN. All right, and your e-mail, which is Tab
91, I think the square, I have got a couple of questions about this,
point Number 5 in this e-mail where you are talking about the
investigating team did obtain information regarding cell phone
calls that were made. You say in here on that point the legal team
also checked with outside counsel as to the legality of this
methodology.
Other than you, sir, who was that outside counsel?
MR. SONSINI. Well, I subsequently learned that the outside
counsel referred to was counsel--made by John Kiernan. I believe
that he was counsel specifically to the investigating, lead
investigator, Mr. DeLia.
MRS. BLACKBURN. So that was a separate outside counsel, it
was not you, and you have represented yourself as being outside
counsel to the Board.
MR. SONSINI. I am one of many outside counsels that
Hewlett-Packard uses, yes, but this reference is clearly not to
Wilson Sonsini.
MRS. BLACKBURN. And then point number 6 you--point
number 4 and point number 6 in that e-mail, where you have the
investigating team did not attempt to obtain the phone records of
nonemployee directors in point number 6, there was no secret
spying example, no electronic gear.
Do you now agree that those were false assumptions?
MR. SONSINI. I think our subsequent investigation clearly is at
odds with these conclusions at that time, yes.
MRS. BLACKBURN. Okay.
MR. SONSINI. And these conclusions at the time, as my e-mail
points out, are based upon two separate reports I received from the
HP legal department in response to my questions: What was going
on?
MRS. BLACKBURN. Did you know those were false before the
8/21 memo, the Number 115 went out, this item Number 115 in
our book? Did you know that those were false at that time?
MR. SONSINI. Well, this all came to light during my
investigation, which took place between August 9th, I believe, and
August 23rd, so that is the period of time that this came to light to
us. That is when we conducted an independent investigation as to
the methods employed and when we began to learn, and I began to
learn exactly what the methodology was.
MRS. BLACKBURN. Okay. You know, it is so interesting to me
to listen to your testimony and how you came to the awareness of
what pretexting was, had you ever heard of it before this took
place?
MR. SONSINI. No ma'am, I did not. Not at all. I wasn't
familiar, quite frankly, with sub-rosa investigations. In 40 years of
practicing law I have never been involved in one.
MRS. BLACKBURN. I find it so interesting because in your
e-mail, you seem to chastise Mr. Perkins for questioning, and
while at the same time, you seem to give a confidence that there is
no legal issue that would surround this, that the company's Board
Chairman really didn't understand or know the details of the
program either, but that everything seemed to be legal, even
though you give yourself some cover in saying that you weren't
involved in the formulation of plan.
So it leads--as we are trying to work through this pretexting
issue, you know, you seem to contradict yourself several times
within the e-mail as to your level of understanding of what this is.
And maybe even your doubts, and I think that is one of the reasons
that we are here.
MR. SONSINI. With all due respect--
MR. WHITFIELD. Gentlelady's time has expired, but I would
like you to answer the question.
MR. SONSINI. With all due respect, I am not chastising
Mr. Perkins. Quite the contrary. I am being forthright as I can be
to lay out to him everything that is going on. I am the first person
to surface to him and to anyone that pretexting was taking place
based upon the information I got from HP. That is first.
Secondly at this point in time, I had conducted no inquiry. I
wasn't asked to conduct any inquiry. I was not knowledge--had no
knowledge of the methodologies used. I was relying upon the HP
legal department. And I required not just a telephone call--I
required two separate reports confirming what they did so I could
pass it on.
I was, as my e-mail points out, being transparent with
Mr. Perkins in response to his questions. There is no inconsistency
whatsoever in my conduct at this time. If we look at the
investigation that I did do, which has been referred to and turned
over to the staff, you will see it was then that we were quite clear
as our views on the situation.
MR. WHITFIELD. At this time, I recognize the gentlelady from
Wisconsin for 10 minutes.
MS. BALDWIN. Thank you, Mr. Chairman.
Ms. Dunn, I wanted to ask this question to Ms. Baskins, but
earlier today, she pled the Fifth, so I am going to ask you. There
was a press conference last week conducted by Mr. Hurd and an
attorney from the law firm of Morgan Lewis.
At that press conference, there was an indication that a draft of
the Kona 2 investigation was prepared in early 2006. Is that
correct?
MS. DUNN. I think the first--sorry, the first report which was
titled "Final Draft" was dated either March 14th or March 12, 2006.
MS. BALDWIN. Could you turn to page--I'm sorry, Tab 72 of
the document book. And this appears to be something labeled
draft, not final draft. And it is dated March 10th directed to Pattie
Dunn, Mark Hurd and Ann Baskins. Is that the document--
MS. DUNN. Yes, I stand corrected on the date.
MS. BALDWIN. And do you believe you possibly received it
around March 10th or on March 10th?
MS. DUNN. Yes, I do.
MS. BALDWIN. Ms. Dunn, can you tell me whether you met
with Mr. Hurd to discuss this draft report at this stage of the
investigation?
MS. DUNN. Yes. After this report was issued, I am sorry I am
not remembering the date, but it is in my written testimony, there
was a meeting between myself, Ms. Baskins, the investigative
team. It took place in Los Angeles. It was around March 15th or
16th.
MS. BALDWIN. And can you share with the committee the
nature of that discussion?
MS. DUNN. Once again, it focused on the results. We were
upset about this matter. We were upset that we were going to have
to ask a long-standing Board member to come forward and
acknowledge after having allowed this investigation to go on with
his knowledge for a year.
MS. BALDWIN. Ms. Dunn, at the time this draft was presented
to you and to Mr. Hurd and to Ms. Baskins, who specifically was
doing the legal analysis to ensure that the investigative methods
detailed in this report were legal? Whose job was that?
MS. DUNN. From my perspective, I was relying on Ann
Baskins. I believe she was relying on Mr. Hunsaker.
MS. BALDWIN. According to the same Morgan Lewis
pronouncement last Friday, in April of 2006, this report was also
provided to an outside corporate counsel. Is that correct?
MS. DUNN. It was provided to Mr. Sonsini as well as to the
chairman of HP's Audit Committee.
MS. BALDWIN. And can you tell me who and what was the
role that they were to play having been provided this report?
MS. DUNN. We, the group I will name, Mr. Sonsini, Mr. Ryan,
myself, Mr. Hurd and Ms. Baskins, met at HP some time in late
April, I believe, to discuss the way forward, given the results of
this report.
MS. BALDWIN. Mr. Sonsini, when you received this draft--you
should look at the document book also. And do you recognize that
document and recall having received it?
MR. SONSINI. I do.
MS. BALDWIN. Okay. When you reviewed that, what did you
think when you saw on page 3, a bullet point at the bottom of that
page: "obtained, reviewed and analyzed HP and third-party phone
records to identify calls made to or from reporters or other
individuals of interest during the relevant time frames." And then
on page 4: "obtained reviewed and analyzed--oops, I am sorry--
engineered and executed a covert intelligence-gathering operation
pursuant to which an undercover investigator established e-mail
contact with Kawamoto, the CNET reporter using an untraceable
Hotmail account." The operation included placing a legally
permissible software tracing device in an e-mail attachment sent to
Kawamoto?
MR. SONSINI. Yes. When I got the report, I got the report, as
Pattie Dunn has indicated, with a view of what do we do with the
result that we now have discovered the person who leaked the
information, what do we the with the result in terms of a corporate
governance point of view going forward?
And I did not focus--other than on the words and the footnotes
saying that it was lawfully done--on this sub-rosa investigation. It
certainly seemed to me to be somewhat over the top. But my focus
at the time because I am not an expert in such matters, and they
would not send this report to me to comment upon those kinds of
issues, my focus was I was dealing now with a serious corporate
governance issue. I've got a problem.
MS. BALDWIN. I, of course, am focusing on what you didn't
focus on. So I guess I want to explore that a little bit further,
because this document was now available to you and to a number
of others. Who was in charge of making sure that--making sure
that this--the tactics used were legal and once this was disclosed
back in March, who pursued questioning the legality of the
techniques?
MR. SONSINI. I think the record has become quite clear that
who was in charge was the Hewlett-Packard internal legal
department. They took the responsibility on rightly, wrongly,
that's what happened. I came in after the fact and learned that.
So that is who is in charge.
MS. BALDWIN. Ms. Dunn, on May 24, 2006, Mr. Kevin
Hunsaker produced a final report of the Kona investigation, isn't
that correct?
MS. DUNN. Yes. There was nothing to the best of my
knowledge that went on from an investigation standpoint from
March 10th to the final report. I believe the only thing that was left
to finalize it were the results of Mr. Ryan, the Chairman of the
Audit Committee, interview with Mr. Keyworth.
MS. BALDWIN. And if you could turn to Document 89, I just
would like to make sure that we are referring to the same
document.
MS. DUNN. Yes, we are.
MS. BALDWIN. So that is the final report.
And on page 4 of that document, we see obviously the final
language here, but it indicates that HP obtained, reviewed and
analyzed HP phone records and third-party phone information to
identify calls made to or from reporters or other individuals of
interest during the relevant timeframes.
Ms. Dunn, when was the earliest that you knew that HP
employees either directly or through outside investigators were
obtaining third-party phone records?
MS. DUNN. As I have testified and in my written testimony as
well, I became aware that phone records were a part of this
investigation in circa June 2005.
MS. BALDWIN. When you read this bullet point in the final
report, were you troubled by that?
MS. DUNN. I need to find the exact bullet point, but I was
certainly not surprised that phone records were involved. I had
known that for 9 months.
MS. BALDWIN. On that same report, page 4, third bullet point
down, again, I will read it for the record, "engineered and executed
a covert intelligence-gathering operation pursuant to which an
undercover investigator established e-mail contact with
Kawamoto, the CNET reporter using an untraceable Hotmail
account, the operation included placing a legally permissible
software-based tracing device in an e-mail attachment sent to
Kawamoto."
Were you troubled by this bullet point in the report?
MS. DUNN. I saw that. Remember the first time I became
aware of that technique was back in February. And that is when I
referred it on. I did not see myself at any point as having a role in
approving methods. I wanted the HP standard ways of doing these
investigations to be used to investigate a standard of business
conduct violation at the Board level. The Board is--the Board
signs up to the same standards of business conduct as every other
employee. And my view was what HP does normally to
investigate these matters is the appropriate thing to use in this
matter concerning our Board. That judgment may be seriously
questionable in retrospect but it was my judgment at the time.
MS. BALDWIN. One closing question. How did you come by
the name Kona 1 and Kona 2?
MS. DUNN. The first time I spoke with Mr. DeLia, which I
believe was some time in possibly April of 2005, I was on vacation
in Kona. The name Kona will never mean the same thing to me
again. But he said you know when we do this work we always
assign a project name to it. Do you have any preferences? And I
looked down at the piece of paper in front of me and it had
something about Kona and I said Kona.
MR. WHITFIELD. Chair recognizes Mr. Burgess for 10 minutes.
MR. BURGESS. Thank you, Mr. Chairman. Thank you all for
being here and your forbearance; we do appreciate you providing
answers to our questions.
Mr. Adler, I don't want you to feel left out, so let's talk for a
minute. Can I ask you for a minute do you have the big book in
front of you?
MR. ALDER. No, I do not.
MR. BURGESS. Can I ask you to get a copy of the big book and
turn to Tab 20?
MR. ALDER. Did you say page 20, sir?
MR. BURGESS. Tab 20 in the great big book in front of you.
Not printed on the Heidelberg press. 20. 20. Two zero.
And in this e-mail, Mr. Hunsaker asked whether there is any
way to lawfully get text message content or is it the same as cell
phone records, did that suggest to you that he believed accessing
cell phone records was illegal?
MR. ALDER. Sir, could you please restate your question? I
want to make sure I perfectly understand you.
MR. BURGESS. Well, you say here, Mr. Hunsaker says in the
message or the message to Mr. Hunsaker says: "Even if we could
legally obtain the records," did you have a reason to suspect that
the obtaining of the records would be other than legal?
MR. ALDER. I am sorry. I am not trying to be smart about this.
I do have a slight hearing deficit and I am having difficulty.
MR. BURGESS. Let me speak slowly in simple declarative
sentences. When Mr. Hunsaker asked whether "Is there any way
to lawfully get text message content or is it the same as cell phone
records?" Did that suggest to you that he believed accessing cell
phone records was, in itself, illegal?
MR. ALDER. I don't fully understand the question.
MR. BURGESS. Okay, we are not going to get an answer. Let's
go to Tab 40, if you don't mind. Can I ask you to turn to Tab 40 in
your book?
MR. ALDER. Thank you.
MR. BURGESS. Right in the middle of the page, under--there is
a heavy line there and it says from Adler, Frederick P, which I
assume is you, right, just below the middle of the page it says:
"agreed I am very concerned about the legality of this
information."
MR. ALDER. Yes, sir. I see it.
MR. BURGESS. Can you tell us what you were concerned
about?
MR. ALDER. This message occurred between myself and my
co-investigator, Vincent Nye. This message went back and forth
between us after a meeting on February 7th between the
investigative, the leak, undisclosed leak investigation team
consisting of myself, Mr. Nye, Mr. Hunsaker, Mr. Gentilucci and
Mr. DeLia.
It was at that meeting that we had, that both myself and
Mr. Nye had started questioning Mr. Gentilucci and Mr. DeLia and
Mr. Hunsaker about the pretext calling and how the information
was being obtained and whether it was in compliance with law.
MR. BURGESS. What did you do to ensure yourself that it
indeed was in compliance with the law?
MR. ALDER. This issue had already been broached the
previous day with a statement by, I believe it was Mr. DeLia, that
they had obtained call information from the personal call
information belonging to Mr. Keyworth. That was the first time
that I had been aware of any such activity.
MR. BURGESS. Mr. Adler I want to interrupt you because of
the interest of time, and I do have a follow-up question that I am
going to submit in written form, and ask if you would--if you
wouldn't mind providing us an answer, but I am going to ask you a
series of questions and it should go fairly quickly.
At any point during the Kona 2 investigation, did anyone say,
what we are doing is just crazy?
MR. ALDER. Essentially, myself and Mr. Nye did. We went
to--we went to--Mr. Nye went to Mr. Gentilucci, as we have
already seen testimony up here today in evidence of. I went to my
manager late on the 6th or early on the morning of 7 February,
2006, and told them I was deeply troubled and concerned about
what happened. Shortly thereafter, Mr. Nye also contacted my
manager after not receiving satisfaction through his manager, Mr.
Gentilucci. My manager, Timothy O'Neill, a former law
enforcement officer, also became very concerned with what was
occurring. And he said that he would go forward with our
concerns. He made contact with both Mr. Gentilucci and with
counsel, which was Mr. Hunsaker, and expressed his concerns.
MR. BURGESS. What was Ms. Dunn's level of involvement in
the Kona 2 investigation, to the best of your recollection?
MS. DUNN. The suspense level?
MR. BURGESS. No, her level of involvement in the Kona 2
investigation?
MR. ALDER. The level of whose involvement?
MR. BURGESS. Patricia Dunn.
MR. ALDER. I have only hearsay to offer to Mr. Hunsaker's
statements, and that was she was being reported to during the
course of the investigation as to our progress, and at the end of the
investigation, she was given a report as to our findings.
MR. BURGESS. Did you attend any of the meetings with Ms.
Dunn about the investigation?
MR. ALDER. No, I did not.
MR. BURGESS. During the course of the Kona 2 investigation,
was Ms. Dunn aware that pretexting was being utilized to access
personal telephone records?
MR. ALDER. I have no knowledge of that.
MR. BURGESS. Would that be included in that report that you
just referenced?
MR. ALDER. The pretexting?
MR. BURGESS. Yes.
MR. ALDER. It could be.
MR. BURGESS. Do we have a copy of that report?
MR. ALDER. I believe--well, I don't know. It was in my
e-mail, but I know the committee has received quite a bit of it, so I
don't know.
MR. BURGESS. Well, did Ms. Dunn have to approve certain
aspects of the investigation before you could proceed?
MR. ALDER. I don't know. That was between Mr. Hunsaker
and Ann Baskins and Ms. Dunn. I have no knowledge.
MR. BURGESS. Two of those individuals took the Fifth
Amendment, so I didn't have a chance to question them, so that is
why I am asking you to help with that.
MR. ALDER. I understand.
MR. BURGESS. Who came up with the idea of the embedded
tracking device?
MR. ALDER. That was my idea.
MR. BURGESS. And we have heard this referred to previously
as a legally permissible--
MR. ALDER. Yes, at the time I understood it to be a legally
permissible way to obtain information. And I still believe it to be
as such. It is--it was and still is sanctioned by my management as
an investigative tool. We have used it in the past for investigations
for determining locations of stolen product and what not. We have
also assisted law enforcement. We have recently recovered an
at-risk child with the same technology.
MR. BURGESS. But who has to approve the use of that--who
has to approve the use of the tracking device; it is almost like
putting a wiretap on your phone Mr. Alder.
MR. ALDER. I beg your pardon, sir.
MR. BURGESS. To me, to a lay consumer, that is akin to
someone putting a wiretap on my phone.
MR. ALDER. A wiretap is normally considered a real-time
interception. This is not a real-time interception. It is also the
interception of personal data. We did not intercept any personal
data.
MR. BURGESS. Mr. Adler, it is equivalent to going through the
mail in my mailbox.
MR. ALDER. I didn't go through your mail.
MR. BURGESS. Let me ask you this. Can you turn to Tab 50
for a moment. So there will be no question in anyone's mind what
we have in front of us, this looks to be a how-to kit on how to put
this tracking device in a zip file and attach it to an e-mail. Is that
correct?
MR. ALDER. That is correct.
MR. BURGESS. And these are instructions that were sent by
you to Mr. Hunsaker and Mr. Gentilucci and Mr. Nye and other
people who took the Fifth Amendment earlier?
MR. ALDER. Correct.
MR. BURGESS. Does Patricia Dunn know that this recipe was
being forwarded and utilized?
MR. ALDER. I have no idea.
MR. BURGESS. Ms. Dunn, do you know? Do you have Tab 50
in front of you? Do you have Mr. Adler's e-mail?
MS. DUNN. I was not copied on this e-mail and I am seeing it
for the first time here.
MR. BURGESS. So this was not something you had been aware
of before today?
MS. DUNN. No, sir.
MR. BURGESS. Does this strike you as being a permissible
tactic to use, attaching a tracking device onto an e-mail? It is
going to give me the creeps to think someone would do that. Does
it bother you?
MS. DUNN. It is kind of surprising that it is legal, isn't it?
MR. BURGESS. Ms. Dunn, Hewlett-Packard has acknowledged
that the personal telephone records of several directors and
employees were accessed during the Kona investigations.
I would like to read to you written testimony provided by Scott
Taylor the chief privacy officer of Hewlett-Packard, during a
hearing of this committee's Subcommittee on Commerce, Trade,
and Consumer Protection. This occurred back in June, and I quote.
"As a company, Hewlett-Packard is 100 percent committed to
excellence in consumer and employee privacy for two fundamental
reasons: First, because it is the right thing to do. We have an
obligation to fulfill the trust that Hewlett-Packard employees have
given us in handling their information."
I would ask you, would you agree that accessing personal
phone records of your employees and directors is a major breach of
trust?
MS. DUNN. It should never have happened. I would like to
add that 99.999 percent of Hewlett-Packard's employees live up to
the statement you just read every day.
MR. BURGESS. I thank you. Mr. Chairman, if I can make one
observation, this is a day I guess that the stock market is going to
crest at a historic high that it hasn't seen since the year 2000. And
we all recall it was in part the lack of corporate self-governance
that brought the stock market low after its all time high of 11,700,
whatever it was back in March of 2000. We have recovered from
that corporate problem. We have recovered from 9/11. We have
recovered from the dot com bubble. Please don't take us down
that path again. I yield back.
MS. DEGETTE. Mr. Chairman, I would ask unanimous consent
for 1 minute to follow up on Mr. Burgess' question, to ask
Mr. Adler a question.
MR. STEARNS. I object.
MR. WHITFIELD. You object? Ms. Eshoo, I said I was going to
go to you next, but it is our procedure to allow the members of the
Oversight Committee to finish first, so at this time I recognize
Mr. Stearns for 10 minutes.
MR. STEARNS. Mr. Chairman, I am going to give unanimous
consent to the gentlelady to ask her question.
MR. WHITFIELD. Ms. DeGette is recognized for 1 minute.
MS. DEGETTE. Mr. Adler, I heard you testify in response to
Mr. Burgess that this embedded technology is a technique used
quite frequently. Is that correct?
MR. ALDER. I believe it to be so. There is a site called
readnotify.com.
MS. DEGETTE. How long have you worked at
Hewlett-Packard, Mr. Adler?
MR. ALDER. A little bit over 3 years now.
MS. DEGETTE. And how often have you used this technique of
embedded technology to trace e-mails during your employment at
Hewlett-Packard?
MR. ALDER. Personally?
MS. DEGETTE. Personally or your--that you know of.
MR. ALDER. I would have to venture a guess at maybe a
dozen, 2 dozen times.
MS. DEGETTE. And in what circumstances?
MR. ALDER. In investigating corporate issues such as theft, as
I said. Also we assisted law enforcement, just recently in locating
an at-risk child with the technology. It is--
MS. DEGETTE. Have you used it to investigate internal leaks
before this particular situation?
MR. ALDER. No, we have not, not to my knowledge.
MS. DEGETTE. Thank you.
MR. WHITFIELD. Mr. Stearns.
MR. STEARNS. Thank you Mr. Chairman.
Mr. Sonsini, let me just ask this question. In your written
testimony, you say that the use of pretexting and similar intrusive
investigative methods in these circumstances is wrong. Is that
correct?
MR. SONSINI. Yes.
MR. STEARNS. In Exhibit 91, however, you conclude that "the
process was well done and within legal limits." So I guess the
question is what has changed between then and now? Do you want
to see that Exhibit 91?
MR. SONSINI. No, I am familiar with it, Congressman. At the
time of that communication, I think you are referring to my June
e-mail to Mr. Perkins, I was relying upon the HP legal department
in responding to me when I asked how should we respond to
Mr. Perkin's concerns? Tell me what you have done?
I received a written report from Mr. Hunsaker who oversaw the
investigation. I received a written report from Ann Baskins of the
General Counsel. I spoke to Ms. Baskins and I asked for repeated
assurances: do you believe that this was all done properly? I then
took that information without any independent investigation, and
sent the e-mail to Mr. Perkins and it says "it appears." "It
appears."
MR. STEARNS. Can I safely say that at that point you felt you
were within your legal limits to do this?
MR. SONSINI. Yes. I was asked to do this by Ann Baskins. I
was asked to respond to Mr. Perkins.
MR. STEARNS. So what--knowing what you know today and
what you said in your testimony, you stand by the position now
that it is wrong, right?
MR. SONSINI. Absolutely. After we did conduct an
investigation and I had the opportunity to look into the matter and
had the opportunity to research the law, and do our investigation,
we concluded quite the contrary.
MR. STEARNS. At the time of these investigations were you
aware that several States including Florida, California and Georgia
were considering legislation that would specifically ban pretexting
for telephone records?
MR. SONSINI. I subsequently learned that. When we did our
investigation in August, we looked at those statutes and we saw
that the law was rapidly changing in the country regarding
pretexting. That's correct.
MR. STEARNS. Perhaps you heard my opening statement. I
mentioned a California statute that said it was wrong to do this.
And that was in play when you were previously involved, in fact,
when you said that you thought it was legally acceptable. Did you
know about that statute back then?
MR. SONSINI. No, I didn't, sir. As I indicated, I didn't know
about the methodologies going on then and I am no expert. I
didn't even know the law of pretexting at that point in time. It
wasn't until we did our investigation in August that I became
cognizant of it.
MR. STEARNS. Ms. Dunn, knowing what you know today, is it
your position that pretexting is wrong today?
MS. DUNN. Yes, sir, it is.
MR. STEARNS. So you are categorically saying it is wrong?
MS. DUNN. It is fraud. It is the fraudulent misrepresentation of
identity. It is wrong.
MR. STEARNS. And knowing what you do today you would not
have let these investigators do this?
MS. DUNN. I would have gone through the management chain.
I did not supervise the investigators, but I would have either
brought it to the attention of the Chairman of the Audit Committee
or to the CEO if I thought fraud was involved.
MR. STEARNS. I would think that since you--and you
authorized it--they would report to you regularly. Didn't they do
that with progress reports?
MS. DUNN. They did provide me progress reports, but I was
not the supervisor of this investigation. I had no role in
management. Other people were involved in managing the
investigation, choosing the techniques.
MR. STEARNS. But you got progress reports, didn't you?
MS. DUNN. I got just updates, and I was focused on the results.
MR. STEARNS. Were briefings given to you?
MS. DUNN. I had--I think there were three meetings over the
course of--
MR. STEARNS. So you had three briefings by--
MS. DUNN. The course of 13 months.
MR. STEARNS. Okay. And the 3 briefings, did they ever tell
you how they got the information?
MS. DUNN. I was told in I think it was April or May, I have
testified earlier, April 2005, that phone records were involved and I
was informed of that by Mr. DeLia.
MR. STEARNS. I think honestly, if you were notified that they
were even doing pretexting, I am not sure you or many people
would even know that that was wrong at that point, because you
know when pretexting came up on our committee, a lot of us didn't
know what it was. And when we heard it and we had a chance to
think about it, we understood it was wrong, but I mean it is such a
serious way that investigators do this that it has probably become
widespread.
MS. DUNN. If I may offer, I think, the word "pretexting" is a
pretext. It is meant to confuse.
MR. STEARNS. Yes, I understand that.
Ms. Dunn, your written testimony is 33 pages long. You go
into great detail explaining why the investigation was necessary
and how you were assured that these aggressive tactics were legal.
You even advocate congressional action to produce clear-cut rules
on pretexting, a suggestion that this committee has endorsed.
However, conspicuous by its absence in your testimony is any
degree of contrition or acceptance of responsibility.
And I have listened to this testimony in my office, and you
have just indicated it is wrong. You indicated you had been
briefed three times, and yet, there is no suggestion that you are
going to accept any responsibility and no sense that what you did
was wrong. So I get the sense after reading your testimony that
you still do not really believe that you did anything wrong here.
And I guess that is a question.
Do you feel that you are totally innocent here and with no
culpability?
MS. DUNN. My understanding is that my opening statement is
a part of my full submission.
MR. STEARNS. Ms. Dunn, if I--
MS. DUNN. May I answer your question, sir?
MR. STEARNS. I am asking the questions. The question I want
is yes or no, do you think that your--have any culpability in this
whole fiasco? Just yes or no.
MS. DUNN. I will repeat what I said in my opening statement.
I deeply regret that so many people were badly affected.
MR. STEARNS. We are not talking about other people. We are
talking about you personally.
MS. DUNN. Including me, that was said in my opening
statement. And I would like to tell you what I would do
differently--
MR. STEARNS. But regret is one thing, but culpability that you
accept blame is another, and I am just trying to think--and I know,
I mean, you could say you are not blamable. You can say that, but
I am just trying to put on the record whether you think you are at
fault for anything, other than regrets and you are sorry and things
like that.
Is it just possible you could say yes or no, that you feel you
have some culpability?
MS. DUNN. If I knew then what I know now, I would have
done things very differently and there are some specific things I
would have done very differently.
MR. STEARNS. I am interpreting that--
MS. DUNN. It is a foundational component of corporate
governance that directors must rely on the reasonable
representations of management.
MR. STEARNS. But--
MS. DUNN. And those I did have.
MR. STEARNS. I am interpreting what you say is that knowing
what you know today it was wrong?
MS. DUNN. Absolutely.
MR. STEARNS. And knowing what you do today that you have
to accept responsibility, you have to accept personal responsibility
for what happened. That is my interpretation of what you are
telling me. Is that a correct interpretation?
MS. DUNN. Sir, I do not accept personal responsibility for
what happened.
MR. STEARNS. Okay, okay. Mr. Chairman, I think she is
basically saying she is not culpable here, and she accepts no
responsibilities for what occurred. I understand.
Now, under the circumstances, considering how you feel,
wouldn't it, at this point, occur to you that you might want to
resign because of all these problems?
MS. DUNN. I have done so, sir.
MR. STEARNS. Okay. Okay. Okay.
MS. DUNN. I will do so again, if you like.
MR. STEARNS. I guess, in your opinion, now you can tell me
why you resigned.
MS. DUNN. I resigned because the Board of Hewlett-Packard
asked me to resign a week ago Friday. Last Friday.
MR. STEARNS. And why do you think they asked you to
resign?
MS. DUNN. Because they had voted twice in the prior 2 weeks.
I am not sure if it was a vote, but I had heard that they
unanimously supported me to remain as Chairman and Director
until about 10 days ago, in which case, by which time the press
reaction to all of this had become so intense that we agreed I
should step down as Chairman in January. But I was asked to
remain as a director by many directors.
The press reaction became more and more and more intense.
And I think that finally, the Board decided I was a major
distraction to the company getting over this problem. They asked
me to resign and I accepted their decision.
MR. STEARNS. Let me ask one more question. Let me just say
that, somehow in my personal opinion, that I have great empathy
for you, because I have seen, I have been in these oversight
committees enough to know that very competent innocent people
get caught up in things they don't understand, but let me, Mr.
Chairman, get my one last question in here.
Ms. Dunn, your written testimony says repeatedly that you
received assurance that the tactics used in the investigation were
both common and legal, but I would like you to turn to Exhibit 39.
Exhibit 39, in this e-mail, one of the investigators, Vince Nye,
expressed serious reservations about what was being done to
gather phone records.
He says "it is very unethical at the least, and probably illegal.
If it is not totally illegal, then it is leading Hewlett-Packard in a
position that could damage our reputation or worse."
So my question is, even if you had been told that these tactics
were legal, why was Mr. Nye apparently the only one to consider
the negative publicity that might be generated and how that might
harm the company? Wasn't that your job there to act and do
something based upon that Exhibit 39?
MS. DUNN. The first time I heard that any member of this
investigative team had concerns about its legality was from my
lawyer this morning, who read it in The Washington Post, and
maybe less than a week ago, I read a report that Mr. Adler had
expressed concerns. There was never any hint that anyone at
Hewlett-Packard had concerns. Quite to the contrary.
MR. WHITFIELD. The gentleman's time has expired. Since all
members of the Oversight Subcommittee have asked questions, I
recognize Ms. Eshoo for 10 minutes.
MS. ESHOO. Thank you, Mr. Chairman, very much. Thank
you to the witnesses.
Ms. Dunn, I want you to know that I have a great deal of
respect for what you have done with your life.
MS. DUNN. Thank you.
MS. ESHOO. You have I think been absolutely remarkable
from where you began, very humble beginnings and culminating
with the chairmanship of the Board of Directors of one of the most
prestigious companies in the world. I want you to know I respect
that.
And again, I have this heaviness about me because I think this
is enormously sad. I just want to make a couple of observations.
There are teams and teams and teams of lawyers around every
company, corporation, publicly held entity, and I guess that is the
way it needs to be. But I think that when you drill down in this,
that there is some lawyer from some shoe box outfit in
Massachusetts that people ended up relying upon for legal advice.
And I think that that should send a huge message to the
company--and to all companies--that, as one of my colleagues said,
none of these things should be circular. People are relying from
one memo to another. But there is that whole the human
interaction of taking time to be thoughtful and say, besides being
legal, is this right? Is this right?
That is why there is so much regret about this. Someone said
to me many, many years ago, whatever you do, Anna, always
remember, picture it above the fold on the front page of the
newspaper, what you say, what you write, what you think and what
you act on. And I think that is a lesson for all of us, there isn't
anyone in this hearing room that is perfect. This is a manifestation
of how less than perfect human beings are, even those that are in
the highest reaches of corporations and law firms.
So with that, Mr. Adler, can you hear me?
MR. ALDER. Yes, ma'am.
MS. ESHOO. I would like to ask you a couple of questions
about this whole investigative arm of HP. How long has HP had a
retainer contract with either SOS, ARG or Eye in the Sky?
MR. ALDER. I am afraid I can't answer the question because I
don't have the information. That was all done through, I believe,
Mr. Gentilucci.
MS. ESHOO. Well, maybe we can find out from Mr. Hurd. Do
you know if these companies have been on retainer with HP and if
so, for how long?
MR. ALDER. I am sorry, I don't have that information either.
MS. ESHOO. How long have you worked for HP? Have you
worked for HP?
MR. ALDER. I am sorry. I worked for HP over 3 years.
MS. ESHOO. And prior to this explosion of this scandal, as an
employee in your position had you ever heard of any of these
people that were on retainer?
MR. ALDER. Yes, I had previously been on an investigation
where it was a group, more or less of a better word, task force.
MS. ESHOO. How did you use them?
MR. ALDER. Mr. DeLia SOS, a/k/a SOS, was responsible for
providing background information during the course of the
investigation.
MS. ESHOO. Are you aware of any pretexting ever going on
through contracting with these outfits, outside of Kona 1 and Kona
2?
MR. ALDER. No, not until February 6th of this year.
MS. ESHOO. When you say you were concerned, what did you
do about your concern?
MR. ALDER. I went to my manager and--
MS. ESHOO. And he was or she was?
MR. ALDER. He is.
MS. ESHOO. He is --
MR. ALDER. Timothy O'Neill, and Mr. O'Neill recognized my
concerns. Mr. Nye also went to Mr. O'Neill, as I stated earlier,
since Mr. Gentilucci wouldn't listen to us.
MS. ESHOO. Was it ever kicked upstairs? This is another
circle, see, where people are concerned but something is not
happening with it. Was it ever kicked upstairs?
MR. ALDER. This is a rather unique circumstance.
MS. ESHOO. It sure is.
MR. ALDER. It was very confidential. There were a limited
amount of people who knew about it. Mr. Hunsaker was counsel
and so we knew, we, meaning Mr. O'Neill and myself and
Mr. Nye, that if we had gone directly to Mr. Hurd or Ms. Dunn or
Ms. Baskins with our concerns, they would have immediately gone
back--
MS. ESHOO. I can tell something didn't happen with it.
Let me go to Mr. Sonsini. It is good to see you.
MR. SONSINI. Thank you.
MS. ESHOO. It is a long way from Palo Alto to this hearing,
but at least the weather is beautiful. It is like Palo Alto here today.
MR. SONSINI. Wonderful.
MS. ESHOO. There is a quote that is attributed to you over and
over and over again in the press. I think that it was, I know that it
was referred to today. I don't have the big briefing book in front
of me with the different sections in it. But essentially it has been
attributed to you that pretexting was legal.
Can you speak to that just briefly? I have some follow-up
questions I would like to ask you.
MR. SONSINI. Yes. The press is absolutely wrong on that. I
never took a position that pretexting is legal. Quite frankly once
we investigated the matter and we got into it, we came out with a
report on legality. The press took the e-mail to Mr. Perkins and
turned it into a legal opinion of Mr. Sonsini. That was not it. My
e-mail was very clear. Mr. Perkins made an inquiry of me. I
promptly went to Ms. Baskins, and I said give me the information
to respond to him. I want to be open to him, what was going on.
I just didn't receive a flippant answer. I got a written report
from Mr. Hunsaker. I got a written report from Ms. Baskins. I
talked to her about it, and I took that information, I conveyed it to
Mr. Perkins and then I said, based upon what they told me, that it
appears--that it appears--that this was within legal limits. It was
not an opinion. It was conveying the truth, what I was told.
At that point in time, I was not asked to give any legal opinion.
That came later. At that point in time.
MS. ESHOO. What about the form 8-K, where there is a
reference to it? Can you speak to that?
MR. SONSINI. The form 8-K--that must be the 8-K filed at the
end of August, and that 8-K, I think, refers now to outside
counsel's view on legality. Yes, that came after we conducted the
investigation which began August 9th, well after the June
exchange.
MS. ESHOO. Let me ask you this. You have been the outside
counsel for HP for years, and--
MR. SONSINI. One of the outside counsel.
MS. ESHOO. Yes, and I think everyone in the hearing room, if
they don't know, should know that you represent a good part of
companies in Silicon Valley.
When there is a director such as the one that--really I can't
believe that he is not here today. This is Dr. Keyworth. How do
you advise a Board when--let me ask you this. Did the Board ever
come to you and say, outside of pretexting and investigations, there
is a problem with this Board. I mean, it really sounds like it is
somewhat dysfunctional to me. People say the parties scrap, the
political parties, but boy you really had a whopper there. But, at
any rate, a member of the Board of Directors of a publicly held
company has a fiduciary responsibility--it is a huge responsibility,
because very average people's money is placed in investment
funds that are invested in premium companies: firemen, policemen,
nurses, teachers, so this is, a very serious thing.
Were you ever made aware that there was someone there who
couldn't keep his mouth shut and that it was damaging, that it was
not only inappropriate, but proprietary information that goes right
to the heart of damaging what shareholders hold?
MR. SONSINI. As a matter of fact, I was aware. I was aware
back in January of 2005. The Board did come to me. Actually it
was the Nominating and Governance Committee along with Carly
Fiorina that came to me and said we believe we have leaks in the
boardroom. What should we do?
I said there are three things we have to do. One, I should make
an inquiry of each director; two, we should remind them of their
confidential obligations; and three, we should conduct an
evaluation of the Board. They said, you have the assignment.
So what I did do, is I talked to each director. I was
unsuccessful in finding the leak.
I reminded them of their confidentiality and then--
MS. ESHOO. Did you talk to Dr. Keyworth?
MR. SONSINI. I certainly did.
MS. ESHOO. And he denied it?
MR. SONSINI. And he denied it. And then I presented a report
of my evaluation of the Board--a very candid report of what I
thought the problem was. You are correct, Congresswoman, that
the leak is a symptom of a greater problem.
The way I dealt with it was to deal with it in the boardroom.
MR. WHITFIELD. Gentlelady's time is expired.
MS. ESHOO. Thank you, Mr. Chairman. Are we going to have
another round?
MR. WHITFIELD. We are going to have another round.
The gentleman from Massachusetts is recognized for 10
minutes.
MR. MARKEY. Thank you, Mr. Chairman. Ms. Dunn, did any
of the previous investigations by Mr. DeLia for HP involve the use
of pretexting in order to obtain telephone records, Social Security
numbers or other confidential personal information for the
company?
MS. DUNN. I have no knowledge about any previous
investigations done by Mr. DeLia. All I knew, and know, is that
he had done work, this kind of work for the company almost
exclusively for 8 or 9 years.
MR. MARKEY. Do you know, Mr. Adler, if Mr. DeLia had ever
used pretexting in other investigations?
MR. ALDER. Congressman Markey, I only can offer hearsay
from Mr. Nye that he had complained to his manager, Mr.
Gentilucci, on previous occasions about the practice.
MR. MARKEY. Mr. Sonsini, do you know if Mr. DeLia had
used pretexting in other investigations?
MR. SONSINI. I don't know. I think our investigation, when
we interrogated him, there may have been an answer to that. I
don't recall.
MR. MARKEY. Ms. Dunn, did any of the previous
investigations by Mr. DeLia or any other person at HP or
employed by HP involve spying on corporate competitors to HP?
In other words, if HP was willing to spy on yourselves, did HP
engage in corporate espionage of other companies?
MS. DUNN. Congressman Markey, the only investigation that
HP has ever done with which I have any familiarity are the ones
known as Kona 1 and Kona 2.
MR. MARKEY. Mr. Adler, do you know if there was corporate
spying on other corporations?
MR. ALDER. I have no such knowledge.
MR. MARKEY. Mr. Sonsini, do you know?
MR. SONSINI. No, sir, I don't.
MR. MARKEY. Ms. Dunn, in a January 2006 e-mail to Kevin
Hunsaker, Mr. Gentilucci states, quote, "We use pretext interviews
on a number of investigations to extract information and/or make
covert purchases of stolen property, in a sense, all undercover
operations."
What do you know about this use of pretext interviews by HP
which Mr. Gentilucci was referring to?
MS. DUNN. I know nothing about HP's investigations outside
of Kona 1 and Kona 2, but I have testified that the methods used in
those two investigations were standard at HP.
MR. MARKEY. Ms. Dunn, an amended 8-K was filed last night
with the Securities and Exchange Commission. Will you please
comment on the accuracy of that filing?
MS. DUNN. Congressman Markey, I have asked my attorney,
Mr. Brosnahan, to communicate directly with Morgan Lewis, a
copy of which letter was sent this morning. There are inaccuracies
in the 8-K. I have to point out that I was certainly no longer a part
of the company when that was filed, but it was based on
information that could have been obtained while I was part of the
directors of HP. And I'm afraid that because no one ever asked
me, and they certainly haven't looked at my sworn testimony, that
filing was made with a couple of mistakes.
MR. MARKEY. Okay. An 8-K filing was made by HP today
which reports that HP's Board has, quote, "reviewed and approved
certain benefits to Ms. Baskins," HP's General Counsel, who
resigned from HP last night and took the Fifth Amendment here
today and refused to testify.
Do you think that giving a more than $3.6 million golden
parachute is an appropriate action by HP at this time?
MS. DUNN. Congressman, I'd like to point out that I'm no
longer on the Board of HP. I did not participate in the
deliberations--
MR. MARKEY. Do you think it's appropriate for her to receive
a $3.6 million golden parachute last night?
MS. DUNN. The way these decisions are made are based upon
deliberation. I would want to hear the other views of the directors
if it were me still sitting on this Board. She was a 26-year
employee of Hewlett-Packard, she bled HP blue ink. This woman,
I'm sorry to say, her career is ruined. She made some errors in
judgment; I relied upon her, as did many others. I'm not going to
comment right now what the appropriate compensation to her is to
leave HP.
MR. MARKEY. The results of HP's leaked investigation were
presented to HP's Board at its May 18, 2006, meeting; is that
correct?
MS. DUNN. May 18th?
MR. MARKEY. May 18th.
MS. DUNN. Yes.
MR. MARKEY. You participated in the Board's discussions of
the results of the investigation. During that discussion did anyone
raise any concern about how this investigation had been
conducted?
MS. DUNN. No one did.
MR. MARKEY. During a meeting a majority of the Board asked
Mr. Keyworth to resign, which he declined to do; is that right?
MS. DUNN. That is correct.
MR. MARKEY. During that same Board meeting Mr. Perkins
announced his resignation; is that correct?
MS. DUNN. That is correct.
MR. MARKEY. Did Mr. Perkins indicate the reason for his
resignation?
MS. DUNN. He did.
MR. MARKEY. Did he indicate that it was related to the leak
investigation?
MS. DUNN. No. He related that it was due to what he
perceived to be a betrayal by me, that we had an agreement to
cover up the identity of the leaker from the Board, which I broke.
And I explained to him that we never had such an agreement, but
that was the reason for his resignation.
MR. MARKEY. So he did not raise at that time any concern
about the methods used in the investigation?
MS. DUNN. He did not in the company's filing of the 8-K.
MR. MARKEY. No. In the meeting did he?
MS. DUNN. In the meeting he did not.
MR. MARKEY. On May 22nd did HP file a Form 8-K with the
Securities and Exchange Commission which is used to report
material events or corporate changes?
MS. DUNN. The company did, sir.
MR. MARKEY. Who was responsible for that filing?
MS. DUNN. That's a statement by management to the SEC;
and it's the responsibility of the Legal Department, with the
approval of the CEO.
MR. MARKEY. Did you review or approve this filing?
MS. DUNN. No, I did not, nor did any member of the Board.
We were provided copies of 8-Ks in the normal course of events
after they were filed.
MR. MARKEY. All right. On May 18th Thomas Perkins
announced--the 8-K stated on May 18th Thomas Perkins
announced his resignation as a director of HP effective
immediately. The text of HP's press release related to Mr.
Perkins' resignation is filed with this report as Exhibit 92. That
press release in turn merely states "HP announced today that
Thomas J. Perkins resigned from its Board of directors on May 18,
2006 with immediate effect," and then goes on to quote Mr. Hurd
as thanking Mr. Perkins for his service to the company.
Would you say that this May 22nd, 2006, SEC filing and
accompanying press release gave a complete picture of the facts
and circumstances surrounding Mr. Perkins' departure?
MS. DUNN. Certainly not with respect to his opinion of me, but
Mr. Sonsini has much more insight as to how that filing was made
than I.
MR. MARKEY. Mr. Sonsini would?
MS. DUNN. Yes, sir.
MR. MARKEY. So before this filing was made, was there any
consideration given to fully disclosing HP's leak investigation, its
findings, the Board request to Mr. Keyworth that he resign, his
refusal to do so, and Mr. Perkins' subsequent resignation from the
Board?
MS. DUNN. May I turn to Mr. Sonsini, our counsel?
MR. MARKEY. Yes. Whoever is the appropriate person to ask
to answer the question.
MR. SONSINI. Yes, consideration was given to that,
Congressman. We filed the 8-K report at that time--I did receive a
copy and did review it--based upon the information we had of why
Mr. Perkins was resigning. I specifically, before that report was
filed, talked to him, and I articulated almost verbatim the
requirement of the 8-K, was there any disagreement, do you have
any disagreement with the company or the Board over any
operation, over any policy, or any practice? He said no.
MR. MARKEY. So why did HP wait until September 6, 2006, to
issue a new 8-K filing with the SEC describing the facts
surrounding Mr. Perkins' resignation if the Board knew in May
what his concerns were, and if HP knew even more by July, why
did it take until early September to issue a more accurate
disclosure?
MR. SONSINI. The 8-K was filed at the end of August. It was
not filed with respect to the item about director resignation. It was
filed to provide other information in the market, and it was
provided then because by then we had completed the investigation
that the Board requested we do about pretexting.
Mr. Perkins' disagreement was not over a company policy
practice or operation. As a matter of fact, I subsequently
confirmed that to him in a June e-mail, reminding him of that, and
he had no--
MR. MARKEY. Well, the September 6 HP filing reports that
after the May Board meeting and in response to the concerns raised
by Mr. Perkins, the Board, quote, "engaged the outside counsel to
conduct an inquiry into the conduct and processes employed with
respect to HP's investigation of leaks, and that this outside counsel
was not involved in the investigation of the leaks initiated by the
chairman or the internal HP group."
Isn't it true that all of that information could have been made
public much earlier in the 8-K filing?
MR. SONSINI. I don't think so. I mean, it could have been, but
it really wasn't material at that point in time because our
investigation wasn't completed. I am the outside counsel. So it
was a judgment on materiality, when to get the information to the
market, and that judgment was made.
MR. WHITFIELD. The gentleman's time is expired.
We're going to do a second round here.
And Ms. Dunn, Mr. Markey raised the issue of the May 18th
Board meeting at HP headquarters in Palo Alto, California in
which you informed the Board that George Keyworth was the
director that was leaking information. And it was told in this
article here that you laid out the surveillance and pointed out the
offending director.
Now, could you describe to the committee what the
surveillance data was that you laid out that at meeting?
MS. DUNN. Mr. Chairman, I'm not sure what reports you're
referring to; if I may, I assume they're press reports?
MR. WHITFIELD. That is correct.
MS. DUNN. The press reports on this matter have been wrong
from the beginning. My sworn testimony, as written and
submitted, has the details of what happened, which I will be very
happy to review with you quickly.
MR. WHITFIELD. Okay.
MS. DUNN. The Chairman of the Audit Committee, Mr. Ryan,
based on a meeting that I have refreshed my memory took place on
April 27th, took away the responsibility for reviewing the report
and informing the Board of its findings. At the May 18th meeting,
he was the person that outlined a summary of the report's findings
to the Board.
MR. WHITFIELD. And could you outline a summary of that
report for us?
MS. DUNN. There is a set of talking points that I believe have
been produced that Mr. Ryan gave to the Board, although he
presented them verbally.
MR. WHITFIELD. What was the evidence against
Mr. Keyworth?
MS. DUNN. That is contained in Mr. Hunsaker's report, and it
is--
MR. WHITFIELD. Could you summarize it for us?
MS. DUNN. There were 10 unauthorized media disclosures that
took place over the course of a couple of years, seven of which
were attributable to Mr. Keyworth and to which he later confessed.
The Board meeting, if I may continue with its conduct,
Mr. Ryan presented, without naming the leaker, the evidence.
Another director had suggested that the identity of the leaker not
be disclosed during deliberations so that the Board could have an
objective discussion about what the right move, if any, was.
MR. WHITFIELD. And who made the decision to disclose it to
the Board?
MS. DUNN. Mr. Ryan disclosed the name, I did not disclose
the name.
MR. WHITFIELD. So you didn't have any say-so in the
disclosure whatsoever?
MS. DUNN. I had turned the matter over to Mr. Ryan on advice
of counsel. There was agreement between myself, Mr. Hurd,
Mr. Ryan, Mr. Sonsini and Ms. Baskins that that was the best way
to take--
MR. WHITFIELD. And what was Mr. Ryan's position?
MS. DUNN. His position was that he--I'm sorry. He was the
Chairman, and remains Chairman of the Audit Committee at
Hewlett-Packard.
MR. WHITFIELD. Okay. And from your perspective, did that
end the investigation? The May 18th Board meeting, was that the
end of the investigation?
MS. DUNN. I believe the investigation ended for all intents and
purposes in mid-March, except for the interview notes that came
from a discussion between Mr. Ryan and Mr. Keyworth on May
17th.
MR. WHITFIELD. And from the surveillance and the
investigations, Mr. Keyworth was the only one identified as
leaking Board information?
MS. DUNN. That is correct.
MR. WHITFIELD. Okay. And let me just say that I understand
perfectly well that the news media does not always get everything
correct. I think all of us have experienced that. But in this article
it also says, and I think you maybe made reference to this in your
testimony, that you and Mr. Perkins really did have some
personality conflicts or--would that be accurate? Or were you all
the best of friends or did you all have personality conflicts?
MS. DUNN. Mr. Perkins disagreed with many of the
governance moves that I made on the Board. He always told me
that he had nothing personal against me, and in fact we had cordial
relations--a cordial relationship until some time in early 2006,
when it became clear that this report was moving in the direction
of identifying his friend and ally, Mr. Keyworth.
MR. WHITFIELD. Well, the reason I was asking, because in this
news article--which may or may not be true--it quotes you as
saying that all of this, this investigation, all of this grew out of a
personal dispute between you and Mr. Perkins.
MS. DUNN. I never said that; I have never seen a news story to
that effect.
MR. WHITFIELD. So you would disagree with that?
MS. DUNN. I have never seen that news story, and it would be
just one among many, many, many that are completely misleading-
-
MR. WHITFIELD. Who is the first Board member that came to
you and said you know what, we need to investigate these leaks?
MS. DUNN. I have tried--I'm under oath here. I have tried,
believe it or not, throughout this to maintain some shred of the
sanctity of the boardroom. If you force me to say, I will, but I do
not think that it is relevant to the public interest that I disclose my
confidential discussions with directors.
MR. WHITFIELD. Was there more than one Board member that
came to you?
MS. DUNN. There were seven of nine.
MR. WHITFIELD. Seven of nine said we need to investigate?
MS. DUNN. Yes, sir.
MR. WHITFIELD. Now, reading from this news report again--
which may or may not be true--it says that--they characterize
Mr. Perkins as sort of a person who had a broad view of things, as
more of a--looked at things in a broad perspective, and they talk
about you as being sort of a nuts and bolts person who crossed the
Ts and dotted the Is. And it was quoted in here that Mr. Perkins
was particularly, in illustrating your attention to detail, how you
became upset about a discrepancy between the corporate Board of
Directors handbook and the HP bylaws, and that that subject
matter took up hours of Board meeting time.
Now I'm just asking this question. Would you say that is an
accurate characterization or not?
MS. DUNN. I'm sure it's Mr. Perkins' view. My view was
what happened was, having been asked to take the job of
Nonexecutive Chairman to bring HP's governance practices up to
best practice, there were a lot of things that needed to be addressed
in the foundations of the Board's governance. It was in the
province of the Nominating and Governance Committee to address
those. I asked Mr. Perkins to serve as chairman of that committee,
and it was in that committee that his impatience with dealing with
those matters showed itself most clearly. He felt that that
committee should be talking about strategy. I felt that the Board
should be talking about strategy, not the Nominating and
Governance Committee.
MR. WHITFIELD. Who gave to the agencies that did the
pretexting the names of the people that you wanted surveillance on
or you wanted the phone records on? Who gave the list to the--
MS. DUNN. They came up with their own list. I continue to be
surprised by revelations of who was on it.
MR. WHITFIELD. So they came back--did they come back--to
you and gave you the list and said, what do you think about this?
Or did you just wash your hands of it and say--
MS. DUNN. Well, they asked me for--I had to provide them
input, context, I was the person who had the problem on behalf of
the Board that had asked me to do something about this. So in any
investigation, whoever it is that has got the problem has to explain
the problem to the investigators.
MR. WHITFIELD. Did you give them any names?
MS. DUNN. No. I wanted them--that was part of having a
professional investigative team--to be able to do whatever they do.
And as I mentioned, ultimately they concluded I was one of the
suspects.
MR. WHITFIELD. And you said that they used the standards of
HP, and yet this was a particularly unusual event because I'm quite
confident that there has never been a surveillance or investigation
of the entire Board before.
MS. DUNN. I'm sure you're right. And I believe that the
surveillance was limited to their efforts to find out more evidence
about whether Mr. Keyworth was in fact talking to a reporter after
they had come to the strong thesis that he was the person
responsible.
MR. WHITFIELD. And you have had an opportunity, I guess--
have you had an opportunity to see the list of everyone that they
investigated?
MS. DUNN. No, I have not seen that list.
MR. WHITFIELD. So you do not know who was investigated
then?
MS. DUNN. I know some by--well, if the press reports are
correct, I know some.
MR. WHITFIELD. Was Mrs. Fiorina investigated from your
personal--
MS. DUNN. Yeah, that one I read about recently.
MR. WHITFIELD. Okay. Now, did you receive a severance
package at the termination of your tenure on the Board or when
you resigned?
MS. DUNN. I was never an employee of Hewlett-Packard. I
have not had one nickel of cash flow from Hewlett-Packard in 6
years, except for committee fees. So I'm kind of out of pocket for
dealing with HP right now.
MR. WHITFIELD. Let me ask one other question, and my time
is expired. Were you the Chairman of the search committee that
brought Mr. Hurd to HP?
MS. DUNN. I was the Nonexecutive Chairman of the Board.
Our whole Board was the search committee, but I did lead the
search administratively.
MR. WHITFIELD. Okay. Thank you.
I recognize Ms. DeGette.
MS. DEGETTE. Thank you, Mr. Chairman.
Mr. Adler, you told Ms. Eshoo that pretexting is--you told me
that the embedded technology, the tracers is a standard technique
used by Hewlett-Packard, correct?
MR. ALDER. You also used the word "pretexting" when you
started. Could you clarify that?
MS. DEGETTE. You said the embedded technology, the tracers
is standard practice, right?
MR. ALDER. Yes.
MS. DEGETTE. What about pretexting? I think you told
Ms. Eshoo that pretexting is also a standard practice.
MR. ALDER. Within HP?
MS. DEGETTE. Yes.
MR. ALDER. I have no further knowledge of pretexting, direct
knowledge. All I can offer you is what I offered Congressman
Markey, and that was there was a complaint by Mr. Nye that it had
been utilized prior.
MS. DEGETTE. You had never personally seen pretexting prior
to this situation?
MR. ALDER. I'm sorry. Could you repeat that?
MS. DEGETTE. You had never seen pretexting prior to that
situation?
MR. ALDER. No, I had not.
MS. DEGETTE. Had you heard of it?
MR. ALDER. No, I had not even heard of it.
MS. DEGETTE. Okay. Mr. Sonsini, as outside counsel to the
corporation, what is your view of the use of tracer technology to
track messages? Do you think that's an appropriate--I'm not
asking for a legal opinion. Do you think that's an appropriate
technique in these situations?
MR. SONSINI. Given what I've learned, I think any technique
that invades privacy is not appropriate.
MS. DEGETTE. Including tracer technology?
MR. SONSINI. Including tracer technology.
MS. DEGETTE. Were you aware tracer technology was at least
attempted to be used in this situation of the Board investigation?
MR. SONSINI. I was not aware of any methodology that was
being used in this investigation.
MS. DEGETTE. Now, it seemed to me when I looked at some
of the voluminous documents here, after Mr. Perkins made his
allegations and you were asked to look into that, the allegations
you were asked to look into were the specific allegations that
Mr. Perkins made, correct?
MR. SONSINI. Correct.
MS. DEGETTE. Did anybody ever tell you that these
investigators were using the tracer technology to try to trace
messages?
MR. SONSINI. No.
MS. DEGETTE. Did anybody ever tell you that they were
coming up with a fake individual to try to have communications
with newspaper reporters?
MR. SONSINI. No, none of that. I assume you're talking about
prior to our investigation of this investigation?
MS. DEGETTE. That is correct.
MR. SONSINI. No.
MS. DEGETTE. Did anybody ever tell you that they were going
through the trash of the Board members or tracking their family
members?
MR. SONSINI. No.
MS. DEGETTE. And what advice would you have given if
somebody had said this is what we're going to do to try to find the
leaks from the HP Board?
MR. SONSINI. It would be totally improper.
MS. DEGETTE. Why would that be?
MR. SONSINI. Because I think it implicates in many respects
the invasion of privacy. And although I'm not an expert on
legality, it certainly doesn't seem to meet the standards of ethics
and integrity that we ought to have at the corporate level.
MS. DEGETTE. Right. We're all focused here on whether or
not the pretexting is illegal, but in truth the rest of these techniques
are just kind of sleazy and I would say not appropriate in a
corporate context; would you agree with that?
MR. SONSINI. I absolutely agree. I think in today's world,
particularly after what Congress has done with Sarbanes-Oxley, we
have emphasized that tone at the top is very critical in the role of
corporate governance, and that means ethics, that means veracity
and that means integrity, and those types of tactics don't have any
place.
MS. DEGETTE. Mr. Sonsini, I think you also would agree with
me that the tone at the top that you refer to should also refer to
corporate boards and officers and not just employees of the
corporation, right?
MR. SONSINI. It should begin with the boards.
MS. DEGETTE. Exactly. This is what I've been saying for 5
years ever since we started these investigations.
Ms. Dunn, I just want to turn to just a couple more issues about
this fake person that you folks were coming up with to try to get
information out of reporters. And I'd like you to take a look at Tab
60, if you will, in your notebook. It's an e-mail dated--or some
kind of memo dated February 22, 2006, from Mark Hurd--from
Kevin Hunsaker to Mark Hurd, with a copy to you. Now have you
seen this top e-mail?
MS. DUNN. I am seeing it now.
MS. DEGETTE. Okay. And underneath it there is an original
message from you, Pattie, to these various people. Do you see
that?
MS. DUNN. Yes, I do.
MS. DEGETTE. Do you recall sending that e-mail?
MS. DUNN. I must have sent it.
MS. DEGETTE. And that's in response to an e-mail from Kevin
Hunsaker to you and to Ann Baskins. And what that original
e-mail says is they're going to propose sending this e-mail to the
reporter, with the hope that she would forward it to your target, the
person who you thought was the leaker, and then what would
happen? And the person--and Kevin says "I made up everything in
the side, trying to make it...feasible." So was it your understanding
this was the fake individual, Jacob, who was going to send this out
to the reporter? Was that your understanding?
MS. DUNN. That is my understanding.
MS. DEGETTE. And then you said in response to that, "Kevin,
I think this is very clever. As a matter of course, anything that is
going to potentially be seen outside HP should have Mark's
approval as well." Is that right? That's what you said to Kevin?
MS. DUNN. Yes. And what I testified earlier to is I regret the
use of the word "clever" because it--
MS. DEGETTE. Right, I'm sure--
MS. DUNN. Because it does not convey what I was--
MS. DEGETTE. Right. And I'm not--I'm not trying to
excoriate you for saying the word "clever," but my point is, you
knew that this--you had said before, you just said go do the
investigation and then they did it, you didn't know; but, in fact,
you knew as it was going along that Kevin Hunsaker was doing
this Jacob to try to get a reporter to respond, right? So you knew
that was going on, right?
MS. DUNN. I did not see myself, nor--
MS. DEGETTE. I'm just asking yes or no, did you know that
was going on?
MS. DUNN. I knew, and I did not see myself as the person who
was appropriate to approve investigative methods.
MS. DEGETTE. Right. And this is what I'm saying. And Mr.
Chairman, I guess I'll just say this, concluding this panel. At first I
did not think this HP issue really rose to the level of the corporate
responsibility issues that we looked at several years ago, but I'm
becoming less convinced of that because this is exactly what we
saw when we brought the executives from some of the other
companies in. Of course these were situations of fraud where
people have gone to jail. That's not what we're talking about here.
But it could happen with another corporation. If boards don't start
to realize that this is a very serious problem, that you can't just say
to somebody, well, I'm only a board member or I'm not a
compensated employee, and so I can put something into--I can put
something into process. I can be the general counsel, I can be on
the investigative team, but I'm not responsible for things that
happen because it's not in my chain of command. We can't have
that anymore. There is a fiduciary duty that every board member
of every corporation has to that corporation.
And Ms. Dunn and Mr. Sonsini, you're both nodding, I think
you would both agree with me. And that's why we really need to
look and see if there is any broader public policy implications to
this. Because Ms. Dunn, you knew a lot of techniques were going
on, you just didn't think it was your job to do anything about it.
Mr. Sonsini, you were outside counsel, and no one bothered to tell
you about a lot of this.
I think it is very disturbing, and I think it is a good case study.
Anyway, that is all I would have to say, Mr. Chairman.
MR. WHITFIELD. Thank you, Ms. DeGette.
I recognize Mr. Walden for 10 minutes.
MR. WALDEN. Thank you very much, Mr. Chairman, I
appreciate the opportunity for another round of questions.
Ms. Dunn, I remain concerned obviously about what I've heard
today based on what also is contained in some of these reports. I
would refer you again to Tab 119 in that huge book you were just
about to slide past you. And in it, item number 14, it says--this is
again from Tony Gentilucci, it stated, DeLia told him sometime
during the week of July 4th that pretexting was fully discussed with
Dunn and Baskins in Kona 1. Do you dispute that that occurred?
MS. DUNN. I'm just going to have to go back to my earlier
statement, sir. I had no understanding or knowledge of the
fraudulent representation of identity as a standard investigative
tactic at Hewlett-Packard. The word "pretext" and pretexting
means a lot to us now, it meant nothing to me in June 2005.
MR. WALDEN. On August 21st, a report from Kevin Hunsaker,
number 118, it's the interview of Mr. Hunsaker, who unfortunately
took the Fifth and has left the company. Number 42 says, "One
month into the investigation the issue of pretexting came up again,
and Dunn and Baskins asked him to confirm the legality of the
investigative method during a Friday phone call before the March
Board meeting in Los Angeles. Dunn and Baskins wanted him to
confirm the method's legality in case Hurd had any concerns
during the presentation in Los Angeles."
MS. DUNN. Well, I think this is very close to true. I did ask for
confirmation that the use of phone records in these investigations
was permissible.
MR. WALDEN. So the issue of--but it says here the issue of
pretexting came up.
MS. DUNN. Well, I think the word now has entered our lexicon
as a substitute for the word "phone records."
MR. WALDEN. But why would you ask about the legality of it
then?
MS. DUNN. That's what a Board member does, you look for
representations--
MR. WALDEN. So they never described the process to you that
they were using? I mean, he says they did. The issue of pretexting
came up, they talk about investigative method.
MS. DUNN. No one ever described to me that the fraudulent
use of identity was the HP way of conducting internal
investigations.
MR. WALDEN. Right. DeLia, though, I'm told, mentioned
impersonation during the June meeting, did that trouble you?
MS. DUNN. If I heard the word "impersonation," it probably
would. I don't recall it.
MR. WALDEN. How did you think they were getting these
phone records?
MS. DUNN. My understanding was that these records were
publicly available.
MR. WALDEN. But I thought I read somewhere here--oh, that's
right. Number 116, page five. And it says, "Dunn said that DeLia
told her such information was basically publicly available," right,
do you remember that?
MS. DUNN. That's my testimony here today, yes.
MR. WALDEN. That DeLia told you that "such information was
basically publicly available," that is in quotes. Then it goes on
down, number 30 says, "Dunn was not aware that one method for
retrieving records entails the callers pretending they're someone
else. Dunn thought that the investigators were able to get the
information just because of the administrative sloppiness of the
phone carriers." What did you mean by that?
MS. DUNN. What I meant was that I understood that you could
call up and get phone records, that it was a common investigative
technique.
MR. WALDEN. So you think I can call up and say anybody in
the public can get your phone records?
MS. DUNN. I thought a year ago, I thought 6 months ago that
indeed you could.
MR. WALDEN. You really believed this? Really? I'm sorry
here, but you believe that I could call whoever your carrier is and
say, I'm Congressman Greg Walden, I'd like Mrs. Dunn's phone
records, cell, home, office--
MS. DUNN. It really wouldn't surprise me.
MR. WALDEN. You're serious? I'm not being funny here, I
mean this. You honestly believed that it was that simple that your
phone records, anybody in the world can just call up and get them?
I mean, is that how you describe publicly available?
MS. DUNN. We have to make a distinction between my
knowledge now and my knowledge during this investigation.
MR. WALDEN. That's what I'm trying to get.
MS. DUNN. During this investigation it was my understanding
that these records were available through permitted mechanisms,
and that it was the common practice within Hewlett-Packard to use
phone records to perform investigations.
MR. WALDEN. But you said you thought they were publicly
available, which means going to the Internet, putting in
somebody's name and up pops my phone record.
MS. DUNN. That would be one idea.
MR. WALDEN. What would be others?
MS. DUNN. I don't know, I didn't give it thought.
MR. WALDEN. Then you go on to say through administrative
sloppiness. That, to me, would say somebody is making a mistake
at Ma Bell.
MS. DUNN. That's a transcription. I don't recall using those
words.
MR. WALDEN. Mr. Sonsini, do you have any reason to doubt
the summary of this?
MR. SONSINI. No, I don't.
MR. WALDEN. Do you have a transcript?
MR. SONSINI. I have no reason to doubt the transcript.
MS. DUNN. This is not a transcript like this woman is
recording our comments. It is an interpretation of what I said.
MR. WALDEN. You're right. So tell me what you meant--did
you use the term "administrative sloppiness"?
MS. DUNN. I don't think so. If I did, I don't understand the
way that it's appearing here, administrative sloppiness. My
understanding was that these--sir, my understanding was that these
records were available generally to investigations such as the ones
that were being conducted at Hewlett-Packard.
MR. WALDEN. Do you have any problem with us getting the
transcript so we know exactly--
MS. DUNN. If one was produced.
MR. WALDEN. Mr. Sonsini, was one produced?
MR. SONSINI. I would have to ask my team, Congressman.
MR. WALDEN. Were these interviews recorded?
MR. SONSINI. Yes. These were just the interview reports, they
were not recorded. There is no recording of the conversation other
than the notes of those who made the inquiry.
MR. WALDEN. But you believe these notes to be accurate?
MR. SONSINI. I do.
MR. WALDEN. And Ms. Dunn believes they're not.
MS. DUNN. This is the first time that these notes have been
produced for me, so I haven't had a chance to go through those
notes.
MR. WALDEN. But you read the part--
MS. DUNN. No one has given me an opportunity to review,
either now or previously, what I said. My understanding is, for
example, that if you give a deposition under oath, you get a chance
to review those deposition notes to make sure that is your sworn
testimony.
MR. WALDEN. Well, this is all I have to work off of. And
there are lots of issues here where lots of people have reported in
the course of the investigation that Mr. Sonsini's firm did, that they
believe you were told about pretexting, and that the methods were
described.
MS. DUNN. I understand the problem. I understand the chain
of communication and why it is confusing.
MR. WALDEN. The part of the chain of communication that
I'm confused about is, you sat as an outside director, charged by a
Board of seven without an official Board position, as I understand
it was seven Board members, basically said please go do this, you
didn't vote on it as a Board, right?
MS. DUNN. We did not. In fact, it was not a matter that could
be brought to our full Board.
MR. WALDEN. And you told me you don't have a staff.
MS. DUNN. No.
MR. WALDEN. You interact with the investigative folks, you
name the investigation, you provide phone numbers for
investigators for certain people you would like them to look at,
you're in interactions with your legal team and the investigators
from time to time, you get briefed on draft findings of the
investigative report, but you don't sign off on any of this yourself,
you defer to senior management, correct?
MS. DUNN. With the addition that I did not hire these
investigators--
MR. WALDEN. I understand, I'm trying to get to a different
point, and that is who in senior management then is responsible for
this investigation since you're not?
MS. DUNN. Well, the last investigation was clearly under the
auspices of Mr. Hunsaker.
MR. WALDEN. Well, he's your counsel. I thought I read here
where more like Mr. Hurd had to sign off on things, is that not the
case?
MS. DUNN. Well, Mr. Hunsaker's title, by the time this
investigation was partway through, and before, is--his title was
Director of Standards of Business Conduct and Ethics Compliance-
-
MR. WALDEN. So he was the final decision maker on this?
MS. DUNN. No.
MR. WALDEN. Who was the final decision maker?
MS. DUNN. I would have said Ann Baskins.
MR. WALDEN. So nobody else on the Board, not Mr. Hurd--so
she could overrule every other decision; is that what you're telling
me?
MS. DUNN. She was responsible for the oversight of the person
carrying out the investigation.
MR. WALDEN. So she reported to nobody?
MS. DUNN. Well, she reported administratively to Mark Hurd
in '06 and to Bob Wayman in '05.
MR. WALDEN. Because at some point the buck stops
somewhere.
MS. DUNN. I'm trying to be responsive to your question about
her reporting relationship.
MR. WALDEN. That's what I was asking. I appreciate that.
My time is expired.
MR. WHITFIELD. Thank you very much.
Ms. Schakowsky, you are recognized for 10 minutes.
MS. SCHAKOWSKY. Thank you, Mr. Chairman. I'm actually
going to have to leave in 5, so--
Mr. Sonsini, I wanted to ask you some questions. And maybe
we're going over some other turf that's already been gone over,
and I hope you will bear with me, I want to explore it a little bit
further.
I'm looking now at this Tab 91 in the big book, and this is the
communications, the e-mails that you have in June, the last one
being your June 28th e-mail to Tom Perkins regarding your--he had
asked you, it was very wordy, he was asking you, you should
check into the sub rosa investigation of director's communication
at HP in the view of Viet Dinh, I guess that lawyer's--unqualified
opinion that it was illegal, I think the Board needs to know the
potential risks.
And then you respond that, quote, "The process was well done
and within legal limits," unquote. And you continue that the phone
records were obtained by the pretexting, and that it is, quote, "a
common investigatory method which was confirmed with experts."
The legal team also checked with outside counsel as to the legality
of this methodology. So I'm wondering who the experts were
whom you consulted?
MR. SONSINI. As the e-mail indicates, I went directly to the HP
Legal Department. I went to Ms. Baskins, and she went to Mr.
Hunsaker. I requested that they give me a response to these
concerns and Mr. Perkins'.
Please understand that I was not conducting any investigation
at that time, was not asked to and was not rendering any legal
opinion. But I believe that he needed to have a response. I asked
for a detailed response. I got two written responses plus oral
assurances, and I reported it to Mr. Perkins. Based on those
responses only, without any independent judgment, I made the
statements that I made here.
MS. SCHAKOWSKY. So your legal team or--an outside counsel
didn't check to determine whether pretexting was legal?
MR. SONSINI. Not at that time, not at that time at all. When we
got the report, we were asked to focus, as Ms. Dunn has testified,
on what do we do with the results? We have a crisis. The Board
was looking to me, we need corporate governance here, what are
we going to do with this. And I laid out a plan that we had to have
full disclosure to the Board, this be vetted out, et cetera.
It was afterwards that the Board, through the Nominating and
Governance Committee, came to me and said we need you to look
into the legality of this, and it was then that my team conducted the
investigation and came to the findings that we came to.
MS. SCHAKOWSKY. So you didn't check, but you conveyed to
Mr. Perkins essentially that you had--
MR. SONSINI. No, I was--
MS. SCHAKOWSKY. The investigation--
MR. SONSINI. With all due respect, my e-mail was very
careful. I told them this is where I went and this is what I learned.
Mr. Perkins was not a director at the time. The question is whether
Mr. Perkins had any standing to even request me to do anything.
But because I believed it was important to get this fully reported
and because I believed that he was entitled to know what legal
counsel would say because he was a director at the time, I asked
him, what do you want me to say, give me a thorough response. I
got it and I conveyed it.
MS. SCHAKOWSKY. Well, I mean, he was clearly very worried
at that time about the sub rosa investigation, and so you're saying
the team did not check the Federal Trade Commission.
MR. SONSINI. I don't know what the team did, other than what
they gave me. I was not involved in this investigation. When they
said that they conducted this legally, when they issued a report that
I received in April, well after the investigation was done, that it
was done in lawful limits, you know, they were relying on their
own experts. They said that they reviewed it, they said they
researched it. You know, the HP Legal Department is a big
department, it has over a hundred lawyers; I've worked with them
for years. Not all matters are farmed out to outside counsel. And
when they are farmed out, they are not all farmed out to Wilson
Sonsini, they have multiple lawyers.
I was given a specific task, and it was a crisis. There was a
crisis in this Boardroom because, as I said, I believe a leak is a
symptom of a bigger problem, and that's what I focused on.
And I want to make that very clear that the press has it all
wrong, that I was passing upon legality at that time. I passed upon
it when I was required to do it, and I passed upon it thoroughly and
strongly and made very difficult findings that were conveyed to the
Board.
MS. SCHAKOWSKY. So then you don't stand behind the fact
that appears--well, except the fact that you say it appears--that you
say that the process was all "well done and within legal limits, the
concerns raised in your e-mail did not occur." That's a declarative
sentence.
MR. SONSINI. At that time, as I repeated, I was passing on
information; I demanded that the information be thorough. And it
is correct, "it appears." I was very careful with this e-mail.
"Mr. Perkins, this is where I went, this is what I was told on the
basis of that, it appears." I was not saying it was legal at that time.
I did not understand the methodologies that were involved. There
was a lot more that we needed to find out and we did find out, and
that's when we started passing on legality.
Mr. Perkins took my e-mail, he thanked me for it, it gave him
the information he wanted, and we were on our way.
MS. SCHAKOWSKY. Well, the information that he got was
reassurances, quote, "the concerns raised in your e-mail did not
occur." I would have felt--I would have liked it, too, and thanked
you for that.
MR. SONSINI. I don't think Mr. Perkins was asking me for
reassurances. Mr. Perkins had counsel at the time, Mr. Dinh, he
had the opinion of Mr. Dinh's concern about legality; that's what
he told me, and I was giving him the information.
MS. SCHAKOWSKY. Thank you.
MR. WALDEN. Ms. Schakowsky, would it be possible for you
to yield to me for a question?
MS. SCHAKOWSKY. I would be happy to.
MR. WALDEN. Ms. Dunn, I have one more question for you on
this topic. It's Tab 66. And this is an e-mail from Kevin Hunsaker
to Vince Nye, Mr. Adler, Mr. Gentilucci, Mr. Anthony, Mr. DeLia.
It says, "I just got off the phone with Pattie. She would like to put
a comprehensive summary of what we've done, what resources
and techniques we've used, et cetera. It should include everything
we've done on the EC folks, the Board members and other
employees. It should also include things like our, and in parens,
unsuccessful attempts to obtain the EC members' cell phone
members," et cetera. It's dated February 24, 2006.
Did you indeed have a conversation with Mr. Hunsaker on the
phone on that date where you ask about resources and techniques?
MS. DUNN. I have no reason to think that he would write this
e-mail without our having had that conversation. I do not
remember this specific conversation. It's quite logical it took
place. I believe what was going on here was that we were
preparing for the issuance of the report that he--final draft or early
draft of the report that came out on May 10th--sorry, March 10th,
and I wanted to convey to him--I'm not sure I conveyed all the
details that he says I conveyed. He may have been using the fact
of a conversation with me, as sometimes happens in big
companies, to put his own momentum behind something that--
MR. WALDEN. Oh, so you think this isn't what you said?
MS. DUNN. I don't know that I said all of these things, but it
would be very logical that I would have said "Kevin, when that
report is written, it needs to be complete, it needs to have
everything in it that you've done."
MR. WALDEN. I guess I'm questioning, if you weren't in
charge of the investigation and you only focused on the last couple
of pages, why were you giving him that much direction?
MS. DUNN. Because I had the responsibility and was thinking
ahead about what our Board was going to receive as a basis for
making a very important, very sensitive decision about a fellow
director--
MR. WALDEN. But this is really pretty specific about resources
and techniques, it doesn't really get much beyond that.
MS. DUNN. That's his interpretation of our conversation.
MR. WALDEN. Okay, thank you.
Every one of these e-mails we have, Mr. Chairman, seems to
have a different interpretation, depending upon who is reading it.
Thank you.
MR. WHITFIELD. The gentlelady from Tennessee is recognized
for 10 minutes.
MRS. BLACKBURN. Thank you, Mr. Chairman. And thank you
to all of you for your patience.
Mr. Adler, I had a couple of questions for you. In going back
to your testimony--which with all of my papers now I have
misplaced. But you talked--I think it was on page 2 of your
testimony where you talk about the standards, and having
standards that apply. And you mention in your testimony several
different times standards, legal standards, and then my assumption
is HP standards that would be applicable to a corporate
investigation. Would I be right in that assumption, sir?
MR. ALDER. No. The standards I referred to were the HP
Standards of Business Conduct, which would be applicable to all
employees. And also, as you said, the legal standards, which are
all, again, applicable to everyone.
MRS. BLACKBURN. Okay. And is that a criteria, a set criteria
that exists in writing, or was that just something that in your
department with Mr. O'Neil as your supervisor you all had devised
kind of a best operating practices?
MR. ALDER. HP practices of conduct are in writing. Every
year employees are required to review those standards and are
given training in them.
MRS. BLACKBURN. So these were standards that were widely
known?
MR. ALDER. I'm sorry, one more time?
MRS. BLACKBURN. They were widely known?
MR. ALDER. The standards of business conduct were widely
known, yes.
MRS. BLACKBURN. Another question. In reference to using
the Spyware, as we call it, the tracer, you mentioned that attorneys
had reviewed the information. Which attorneys reviewed that for
you?
MR. ALDER. I think we're getting this confused perhaps
slightly. Attorneys review with regard to--I know I did say that,
with regard to the pretexting?
MRS. BLACKBURN. Yes, sir.
MR. ALDER. That was in my statement. I was making
reference to the pretexting issue, that we were told that at least the
attorneys had reviewed the pretexting.
MRS. BLACKBURN. But it did not apply to the investigation as
a whole?
MR. ALDER. Well, Kevin Hunsaker, our chief of ethics, is an
attorney, and we worked at his direction, and he was our counsel.
And so everything was reviewed by him for legal compliance.
MRS. BLACKBURN. Okay. All right. Thank you.
MR. ALDER. You're welcome.
MRS. BLACKBURN. Ms. Hurd, I want to stay with this tracer.
MS. DUNN. I think the real Mrs. Hurd would be surprised by
that.
MRS. BLACKBURN. Ms. Dunn, and the relationship between
you and Mr. Hurd. And I'll tell you where I'm going with this.
I'm going to read from your testimony again that you supplied to
us yesterday, and I'm on page 20 in the first paragraph, where you
say "neither Mr. Hurd nor I designed or implemented the
investigative techniques; however, we both were made aware of
the sting operation that the investigators proposed in early
February for the purpose of determining whether the CNET
reporter whom Mr. Keyworth was suspected of talking, and by
then the investigative team had narrowed its hypothesis about the
identity of the leaker to him, was in contact with Mr. Keyworth. I
was contacted by Mr. Hunsaker, with Ms. Baskins in the loop on
the communication about this. Having asked for and received all
immediate assurances that this was a legal and common
investigative technique, I referred them to Mr. Hurd for the final
decision."
Now, did he indeed make the final decision about moving
forward with all forms of the investigation?
MS. DUNN. With all forms of the investigation? No. I don't
think that is true. I think that the methods were delegated to Mr.
Hunsaker, with oversight from Ms. Baskins.
MRS. BLACKBURN. So he made the final decision on the sting
operation?
MS. DUNN. I believe he needed to be aware of it. I don't know
the way in which he communicated his views back to the
investigative team.
MRS. BLACKBURN. I just have such a difficult time trying to
figure out who--where did the buck stop? In HP, where did the
buck stop with making the decision to conduct the sting? Where
did the buck stop with making the decision to use a tracer
technology? Because Mr. Hurd is going to come and tell us on
page 7 of his testimony that they--let's see, "In February 2006 I
was informed by the investigation team that they intended to send
an e-mail to a reporter containing false information in an effort to
identify the source of the leaks. I was asked and did approve the
content of the e-mail. I do not recall seeing, nor do I recall
approving, the use of tracer technology."
Well, we've got two different things going here. One is the
Spyware, if you will, and that is attached to the e-mail, and another
is the content, the text that is in the e-mail. And it is of tremendous
concern that we don't seem to have anybody that wants to say yes,
indeed, I was in charge, I was expected to be in charge, and I made
the decisions accordingly. So I'm trying to get to that--
MS. DUNN. Well, I think some of those people have just
declined to testify, and that's frustrating for us all.
MRS. BLACKBURN. Okay, let's go to Exhibit 52.
MS. DUNN. Would that be Tab 52?
MRS. BLACKBURN. Yes, ma'am.
MS. DUNN. I'm there.
MRS. BLACKBURN. Okay, great. Okay. This is an e-mail from
you, starting with the original message. "I spoke with Mark. He is
on board with the plan to use the info on new hand-held leader. He
also agrees that we should consider doing something with the
adaptive enterprise branding issue, given there is some chance
D.K. will seek clarification on this from her CNET source." And
then his response, the response coming back to you, "Understood,
thanks. We will put this in motion in the next few hours."
So this e-mail seems to indicate that Mr. Hurd was not only
aware of the operation, but he was making suggestions to you or
somebody as how to implement it. Is that accurate?
MS. DUNN. That doesn't feel like what happened to me.
MRS. BLACKBURN. Well, what--
MS. DUNN. What happened was that this team was devising
methods to finalize the investigation to be very confident that they
have identified the correct person after nearly 2 years of
problematic leaks, and that they were enthusiastically sharing their
ideas with the most senior people that they could find. And I don't
know how Mark responded per se. I would respectfully say that
that's a question for him to answer because it would be hearsay on
my part.
MRS. BLACKBURN. Okay. All right. Thank you.
Mr. Chairman, I yield back.
MR. WHITFIELD. Thank you very much.
At this time I recognize Mr. Inslee for 10 minutes.
MR. INSLEE. Thank you.
Mr. Adler, I wanted to ask you about the tracer technology, and
I want to make sure that I understand how it worked. As I
understand, HP would essentially send an e-mail with an
attachment, with this attached to Mr. Smith, and when Mr. Smith
sent an e-mail to Mr. Jones, somehow that would report back to HP
indicating that Smith had sent Jones this document; is that how it
works?
MR. ALDER. No, sir.
MR. INSLEE. Okay. Tell me how it works then.
MR. ALDER. It's dependent upon--well, the document itself,
not the e-mail, the document is within the e-mail, the document
itself must be opened.
MR. INSLEE. Correct.
MR. ALDER. Is that what you said?
MR. INSLEE. Well, you corrected me, I'm sorry. You were
accurate, I misstated. It is the documents--the delivery of the
document that is reported back to HP. Thank you for correcting
me.
MR. ALDER. It does not report back to HP. It reports back to
the company that provides the service, readnotify.com, and it's
through the auspice of your personal account. You may then open
the account and see if a return receipt has been provided for that
particular document.
MR. INSLEE. And when does that information come back? Is it
essentially contemporaneous with Jones, the recipient of the
second e-mail, opening the document? Does it happen right away?
MR. ALDER. Any time the document is open, there is a report
that is generated.
MR. INSLEE. So you attempted to distinguish this from a trap
and trace system or an eavesdropping system or a tap by saying it's
not contemporaneous; it pretty much is contemporaneous, isn't it?
MR. ALDER. No, not really.
MR. INSLEE. I mean, because as soon as Smith gets it and
opens up the attachment, boom, that goes immediately back to this
company; is that right?
MR. ALDER. But Smith had already received this attachment,
and therein I believe lies the difference.
MR. INSLEE. I just want to make sure I understood this. When
Smith sends an e-mail to Jones, as soon as Jones opens that
attachment, immediately that information goes back to the
reporting agency; is that right?
MR. ALDER. That is my understanding, as soon as the
document is open.
MR. INSLEE. Now, is it my understanding that HP's corporate
policy is that that is an acceptable corporate strategy to use trace
technology like this when HP decides to use it? Is that HP's
decision now, or was it during the scope of this investigation?
MR. ALDER. That was and still is current policy.
MR. INSLEE. So let's say that you have a customer of HP, you
do business with them, you sell their products, they are your
trusted, treasured customer to whom you expect to have a
relationship of great integrity. You believe, and it is currently
HP's policy, as I understand it, that you can send an e-mail to them
with this tracing system. Let's say you sent it to ACME
Electronics, your good customer, and when ACME Electronics
then sends an e-mail to Smith, let's say their attorneys, they send
an e-mail to their attorney or to their priest or to their doctor, and
what they may consider to be a confidential communication, free
from the prying eyes of HP, as soon as their priest or their doctor
or their accountant or their neighbor or friend opens that
attachment, HP will then get back a report immediately that this
e-mail has been sent to that location, even though your customer
has never been informed you're going to do that. Is that pretty
much HP's operating procedure?
MR. ALDER. No. Number one, we don't send this type of--we
don't use this type of technology with our customers. Number
two, in the sense that there is no information from the recipient that
is derived, other than the IP address; that is, the Internet Protocol
address, that is all we get. That address may only tell us that it is
in the United States, that it is in the world or in a specific region.
As in the case of what we attempted to do is we've suspected it
would be Mr. Keyworth that would be the recipient. The best that
we would have found out from his IP address reporting back to this
"read notify" was that it would have been in the Oakland area or in
northern California for an AOL customer. That is what it would
have discerned.
MR. INSLEE. Let me make sure I understand. You used that IP
address and eventually found out where the e-mail was being sent
to. That is the reason you did this. You didn't do this for a
statistical sort of information purpose. You were going to use this
to find out where those e-mails were being sent. That is obvious to
everybody in this room. So that is pretty clear.
Now, you said you don't do it to your customers. I can see a
situation where HP would want to know if your customers are
having communication with your competitor, for instance, a
potential contractor who is a competitor of yours. Is there an
internal policy that prevents any of your thousands of employees
from doing that?
MR. ALDER. I would consider it in violation of our Standards
of Business Conduct, yes.
MR. INSLEE. And what standard would it violate?
MR. ALDER. Since I don't have them in front of me, I can't
specifically recall which one would be the specific one that would
apply in this case. I am sorry.
MR. INSLEE. Well, Mr. Sonsini, is the use of that trace
technology legal, in your opinion, under Federal and/or State law?
MR. SONSINI. That is a great question. I think that the law
regarding that is not as clear as it should be. Depending on how it
is used and the methodologies, it could very well implicate Federal
or State statutes.
I think the whole area is an area that we probably need more
clarity.
MR. INSLEE. I agree with that assessment, and we--many of us
have been trying to get more clarity regarding privacy laws,
including the Chairman and Mr. Barton have been involved in
some efforts in that regard. We have been stymied. We have this
simple bill, just so you will know what is going on here in
Congress--we have this--you know, a bill that we all voted for
unanimously we can't even get House GOP leadership to schedule
for a vote now.
But let me ask you this: Do you think, knowing what you
consider to be a grayness in this area, would you suggest that there
should be statutory codification clarifying this situation regarding
trace technology in these e-mails?
MR. SONSINI. I think so. We do have computer statutes that
make invasion of computer hardware illegal. And I am not an
expert on how tracers are used in invasion, but if there is invasion
of computers, we probably have good coverage.
But in the whole area of pretexting and the various
methodologies used, I agree with the statements of many members
of your Committee that we should have more clarity in that area.
That does not mean that methodologies that are employed cannot
be in violation of law, existing law.
MR. INSLEE. I want to get a clarification of something that I
just did not understand. I understood you in earlier testimony you
said something to the effect that this pretexting and similar type of
efforts were a violation of privacy and should not be common,
something to that effect. And what I didn't understand about that
is that you receive this draft--I understand it was a copy sent to you
from Mr. Hunsaker--which described the pretexting that had gone
on in considerable detail. Then you wrote--that was on June 21st,
2006.
Seven days later on June 28, 2006, you wrote an e-mail to
Mr. Perkins basically saying everything is hunky dory, there is
nothing illegal. And I am reading this document, this e-mail from
you, that doesn't--a fair reading of it, I think, is raising no red flags
or a concern from you as counsel.
Now, given your testimony to us today that you consider
pretexting to be--sinful is the wrong word, but unacceptable, a
violation of people's privacy, how do you juxtapose this when
you're a lawyer--you have been told this is going on with one of
your treasured clients, somebody asks you for a report, you send
them an e-mail, and you don't raise any red flags whatsoever. I
have trouble reconciling that.
MR. SONSINI. Let me explain it. As I have testified to several
times today, and I would like to elaborate on again, that e-mail to
Mr. Perkins was not a legal opinion because, A, I had not
conducted any research; B, I was not aware at that time of the
methodologies used, I was conveying the opinion of the HP legal
department.
MR. INSLEE. What do you mean you didn't know the
methodology? That is where I had trouble. You were told in this
that they were doing pretexting.
MR. SONSINI. Yes, and pretexting generally, other than the
Gramm-Leach-Bliley Act relating to financial institutions, is not
illegal.
It depends upon the methodologies in pretexting. For example,
if Social Security numbers are used, then it is very likely that there
is a violation of a Social Security statute. There are other laws; the
Federal Trade Commission takes a viewpoint it could be an unfair
trade practice.
The point is that as members of the Committee have said, we
need more clarity. You have a bill in the House now that is
designed to clear things up.
MR. INSLEE. Let me ask just a simple question. Pretexting to
anybody here means you call up and you lie about your identity in
order to get information. To any lawyer or layperson, that is what
it means.
You were told that people in HP were calling up to get phone
records, lying about their identity, and getting that phone record.
And then you sent an e-mail that didn't raise any concerns
suggesting that it stop, suggesting that the method be investigated.
You didn't suggest whether Social Security numbers were
involved. You did not suggest that you clarify as to whether or not
you were violative of these. You didn't suggest anything
suggesting that this thing was unacceptable. And I just find that
unacceptable. I don't understand it.
MR. SONSINI. I want you to understand it. It is a fair question.
I didn't know what pretexting was.
There was--I had no knowledge of the methodologies. I did
not know Social Security were used. That is the problem. At the
time that I sent that e-mail, I was being as open and transparent as I
could. I was not an expert in these matters. I did not know what
pretexting meant at that time. I was not asked to investigate it at
that time. I was trying to do my job, reporting to him what the HP
Legal Department gave me the assurances that they did.
MR. INSLEE. One more question if I can, sir. Do I understand
you didn't know pretexting involved lying about the identity?
MR. SONSINI. I didn't know what pretexting was.
MR. WHITFIELD. The gentleman's time has expired.
Ms. Eshoo, you are recognized for 10 minutes.
MS. ESHOO. Thank you, Mr. Chairman.
I think that there is an awful lot that has been set down for the
record, and I think that Members have really asked excellent
questions from both sides of the aisle.
I have a few questions. I don't know whether I will use the
10 minutes or not, but I want to go to Mr. Adler first, again.
Are you aware of any rusing that has been used in anything at
HP? Is it something employed by HP? Did you hear me?
MR. ALDER. No, not really. This is an unusual circumstance
as far as my knowledge is concerned. You said rusing, correct?
MS. ESHOO. Uh-huh.
MR. ALDER. No. This is pretty much--this is unusual. It is not
something that--are you maybe--
MS. ESHOO. I don't want your opinion about what you think of
it. I want to know if it is something that is practiced or used. Is it
a tactic that is used or has been used at HP?
MR. ALDER. What do you consider to be a ruse so I can better
answer my question?
MS. ESHOO. You were just describing it to me. If you don't
know, I will describe it to you.
MR. ALDER. If you want to talk about the use of the e-mail by
the name of Jacob, that is the first time we have ever employed
that, to my knowledge. If you want to talk about the tracer
technologies in that context, then we have used it probably, as I
said, a dozen times that I am aware of.
MS. ESHOO. It is a few shades off from the pretexting for sure,
but it is still a deceptive method that is used to secure information.
It could be used by an employee, used by a relation to impart or to
convince the third party that it is the authentic party requesting the
information. If you are saying no, then I will accept your answer.
But--
MR. ALDER. Okay.
MS. ESHOO. You said no?
MR. ALDER. No in regard to what?
MS. ESHOO. Well, you know what, you have to be smart to
play dumb. So I think I have been pretty direct about my question.
I asked you if rusing has been used. Then you asked me to define
it. I give it to you, and then you are confused?
MR. ALDER. Yes. Rusing, it has been used.
MS. ESHOO. It has been used?
MR. ALDER. Yes, ma'am.
MS. ESHOO. And for how long?
MR. ALDER. I don't know. I would probably say probably for
the last 3 years or so that I am aware of since I have been there.
MS. ESHOO. Mr. Sonsini, what is there today in terms of our
laws that direct themselves to the situation that the HP Board
found itself in? And that is, a director that lied consistently that he
had not leaked, when it was determined-by pretty bad ways, but
it was still determined--that he was the guilty party, damaging
information, damaging, I think, in terms of shareholders, and
certainly, in my view, violated his fiduciary responsibility.
In advising the Board or if you were to advise the Board, what
are the options that are available for a publicly held company when
they have a director that they can't fire? I mean, I don't know
what the directors' terms are at HP. They are probably going to go
back and look at this. There is a lot of talk in politics about term
limits. They are going to have to look at term limits there or
shorten the term limits.
Is it simply the manual of the ethics of the company, or are
there other instruments that can be used to be brought to bear in
this kind of a situation? Because, I don't think, with all due
respect to HP, that this is totally unique to them. Human beings
make up boards. Human beings are less than perfect. God knows,
there is leaking. We know sitting up here that there are leaks. And
this is something that people are tempted to do, I am sure, in the
private sector as well. So--
MR. SONSINI. Well, what we do, and it is a very good question,
and it is very consistent with what we did back in January 2005 or
February, first of all, it is very important that boards continually
evaluate themselves, peer-to-peer evaluations, board evaluations
where you have candid review of what you are doing and what
people are doing.
Secondly, it is very important that boards adopt guidelines that
deal with fiduciary duty issues, confidentiality and the like.
MS. ESHOO. But are there Federal or State laws or agencies, to
go to, for example, the SEC, and say, our hands are tied, we
believe there is something wrong here?
MR. SONSINI. No. It is corporate law. It requires directors to
exercise due care and duty of loyalty and duty of candor. And if
they step over the bounds, then they are in breach of that fiduciary
obligation. They lose the protections of the business judgment
rules that shield them from liability. So they have personal
liability exposure, and that is the tone at the top that you have to--
MS. ESHOO. Can the corporation sue them for this if they
determine--
MR. SONSINI. Yes. If a director breaches a fiduciary duty and
harms a corporation, the corporation that has been harmed can
bring legal action, yes.
MS. ESHOO. Well, there is an area where the law really comes
into play, and that is in terms of tipping, but that is a whole other
standard. That is a whole other standard.
Ms. Dunn, thank you.
Ms. Dunn, you have testified today more than once that you
didn't direct the investigation; it was, in other words, this was an
internal unit within HP management, that they executed and
contracted out or had someone on retainer that did this.
Now, you also said that you found out what other members
asked, others that were investigated. And how did you find out
that you were pretexted? Is it through the press, or you were told
that you were going to be?
MS. DUNN. No, I was not told I was going to be, but in all
candor, there has been such a torrent of information that has come
to me in the last 3 to 4 weeks about this matter, I can't tell you how
I found out, but it was within the last 3 or 4 weeks that it came,
someone told me that I had been pretexted, which I didn't--I hadn't
realized previously. And I am sorry, I just can't remember who
told me. If I could consult with my attorney, he may remember,
but I don't.
MS. ESHOO. I just thought it was interesting in terms of your
testimony that you were as well.
So was the whole Board investigated by--
MS. DUNN. My understanding--
MS. ESHOO. Maybe Mr. Adler knows. Mr. Adler was the
entire Board investigated?
MR. ALDER. Yes, ma'am.
MS. ESHOO. Everyone?
MR. ALDER. Yes, ma'am.
MS. ESHOO. All nine?
MR. ALDER. Yes.
MS. DUNN. That is the first I am knowing this fact, so that is
an interesting fact.
I would like to throw in that, you know, the attitudes by
directors toward their privacy versus the confidentiality of the
company they serve seems to be very different from the general
public. I will draw your attention to an Associated Press survey
that was done in the last week to 10 days--
MS. ESHOO. I saw that. I read that in your extended testimony.
I thought that was very interesting.
MS. DUNN. And it turned out that 85 percent of directors
surveyed believe that their personal privacy was secondary as
director to the needs of a company to uphold confidentiality. And
I have had directors say to me since this matter broke, many
directors from well outside of HP, that when they join a public
company board, they assume away a lot of privacy rights. It comes
with the territory.
Now, I am not condoning the misrepresentation of identity
through pretexting. I have said and would like to repeat that. I
think there needs to be a much clearer legal backdrop for that
activity.
MS. ESHOO. I want to get back to--I have my needle stuck on
something.
From what I am hearing is that regardless of what a member of
a board, a director, does, there really are not tools or instruments to
remove that member other than kind of appealing to the director
and saying, "We don't think you have lived up to your fiduciary
responsibility," or whatever the case may be.
Is there something, or is there not? I mean, what is there to
prevent this in the future? And are there any instruments to indeed
punish someone if they don't live up to that? Is it simply--I
shouldn't say simply--I know that the standard of business conduct
is very important, but is there anything else?
I think Mr. Sonsini probably wants to answer that.
Thank you, Mr. Chairman.
MR. SONSINI. Directors serve at the pleasure of the
shareholders. The shareholders are the ones that can appoint and
remove directors. Boards can't remove directors.
What boards do is they have to evaluate themselves and decide
who should stand as director. If a director takes action that harms
the corporation, that director can be sued and has liability. That is
basically the state of the law.
MS. ESHOO. Thank you.
MR. WHITFIELD. Mr. Markey is recognized, 10 minutes.
MR. MARKEY. Thank you, Mr. Chairman.
Ms. Dunn, on page 20 of your testimony, you say that in early
February of this year, both you and Mr. Hurd were briefed about a
sting operation proposed to send a fake e-mail to a CNET reporter;
is that correct?
MS. DUNN. That is my testimony, yes, sir.
MR. MARKEY. Were you both told that this e-mail would
include an attachment that had a tracer or spyware in it?
MS. DUNN. I never heard the word "spyware" in connection
with this investigation.
MR. MARKEY. But did you hear the word "tracer"?
MS. DUNN. I did hear the word "tracer."
MR. MARKEY. What did you understand that to be?
MS. DUNN. I understood it to be a way of confirming the
receipt of an e-mail by someone who was under investigation.
MR. MARKEY. So you did not understand it to mean that it
would perhaps open up then this reporter's file; that would make it
possible then to trace where that reporter would be going in terms
of phone calls or other communications to other people?
MS. DUNN. No. That is not my understanding of how it
works, and perhaps Mr. Adler could clarify how it works--
MR. MARKEY. What did you understand the word "tracer" to
mean?
MS. DUNN. That it would simply confirm whether a certain
e-mail had been received and not necessarily by the person, but by
someone in, let's say, the area the size of the Bay area.
MR. MARKEY. So in order to catch a leaker on the Board, an
investigation was launched. The concern was that these leaks are
hurting HP. The Board members have a fiduciary responsibility
not to hurt the company, but to grow it. And so investigating HP
directors was deemed fair game given their role at HP.
But what thought was given to whether it was appropriate to
spy on reporters who have no relationship, fiduciary or otherwise,
with HP?
MS. DUNN. The spying on reporters was not something that
was brought in any clear way to the attention of certainly me. I
don't know about Ms. Baskins, but I did learn on September 6th
that reporters had been pretexted.
MR. MARKEY. Can I just say this, Ms. Dunn? I understand
that you are the Chair of HP.
MS. DUNN. I was the Chairman.
MR. MARKEY. You were the Chairman of HP, and it is one of
the leading technology companies in the world, and you are
testifying here to a decided lack of knowledge of technology and
its uses, which to a committee with jurisdiction over the
telecommunications industry, is a little bit disconcerting, to be
quite frank with you.
MS. DUNN. May I respond to that?
MR. MARKEY. You may. But we are only congressional
experts, but that means we are only experts compared to other
Congressmen.
MS. DUNN. I am not an expert in technology, and that was not
my role on the HP Board. A board is composed of individuals who
have different skills--
MR. MARKEY. I understand what you are saying.
MS. DUNN. My particular skills were not in technology, and
that was not the role I fulfilled on the HP Board. I was considered
a financial expert. And ironic as it may seem to you now, I was
also an expert in corporate governance.
MR. MARKEY. So who believed it was appropriate to spy on
non-Hewlett-Packard individuals in this investigation, Ms. Dunn?
MS. DUNN. I don't know who at my level or Mark Hurd's
level considered it was appropriate to spy on reporters.
MR. MARKEY. Are you saying that you didn't understand that
the attachment with the spyware was an intrinsic part of the sting?
You didn't understand that?
MS. DUNN. The word "spyware" was never a part of what I
understood to be the case.
MR. MARKEY. Or some similar type of term to describe what
was going to be--what the plot was with regard to this report, not
necessarily spyware.
MS. DUNN. Well, as Mr. Adler has testified, this is a common
investigative technique that has been used, and I am just quoting
his testimony, one to two dozen times at Hewlett-Packard in
sensitive investigations. It is still the policy of HP that this
technique is a standard and acceptable part of its arsenal in
investigative methods.
MR. MARKEY. Did you receive any substantive reports as to
the subsequent success or failure of this sting?
MS. DUNN. I heard, by the by, that it didn't work.
MR. MARKEY. That it didn't work. And can you give a name
to the vine? Does the vine have a name?
MS. DUNN. No. No. I was saying by the by. I heard
somewhere within the chatter, if you will, that it hadn't worked. I
don't recall a specific communication.
MR. MARKEY. And how often is this technique used on
non-HP--
MS. DUNN. I don't know. The only knowledge I have of it
firsthand is in this matter, and I was quoting Mr. Adler's previous
testimony as to its use at HP otherwise.
MR. MARKEY. Mr. Adler, how often is this technique used on
non-HP individuals?
MR. ALDER. I can only speak from my own personal
experience, and I would venture a guess as to the rest, sir. I know
that I have used it at least on two occasions on non-HP persons.
MR. MARKEY. And who were those persons?
MR. ALDER. Excuse me?
MR. MARKEY. Who were those persons?
MR. ALDER. One was the reporter, Ms. Kawamoto, and also
on a suspected theft suspect in Houston. I don't recall his name.
MR. MARKEY. And to the best of your knowledge, those are
the only two occasions where HP used this technique on non-HP
individuals?
MR. ALDER. The only 2 occasions that I used it. I know that
my coworkers have also used it. I know that law enforcement uses
it.
MR. MARKEY. I am talking about just HP itself, not law
enforcement. You are saying that at HP it has been used by other
individuals as well on non-HP individuals?
MR. ALDER. Yes, sir.
MR. MARKEY. How prevalent? Are you talking about a
handful of times, or is it a prevalent practice?
MR. ALDER. I think I offered earlier, one to two dozen times I
estimate in totality.
MR. MARKEY. Mr. Sonsini, you are one of HP's outside legal
counsels. Were you at all involved in the company's 8K filing
made earlier today, disclosing the fact that HP had concluded an
agreement with Ms. Baskins that provides her with a
multi-million-dollar golden parachute?
MR. SONSINI. No, I was not.
MR. MARKEY. Thank you.
Mr. Adler, you say that you were advised that this opinion was
the result of a review by at least two attorneys. Were you told who
the two attorneys were who provided the legal opinion that you
relied upon?
MR. ALDER. The two attorneys that I referenced were
Mr. Hunsaker and an outside attorney whose name I don't know.
MR. MARKEY. Now, Mr. Adler, did you ever read any legal
memos or e-mails from these two attorneys that explained their
basis for their opinion?
MR. ALDER. No, I did not.
MR. MARKEY. I would like to turn to a Saturday, January 28,
2006, e-mail that HP senior counsel Mr. Hunsaker sent, and also a
copy to HP's Global Security Manager Mr. Gentilucci and your
colleague Mr. Nye. This e-mail says this: "Hi Fred, apparently
Perkins almost never uses his cell phone and instead does just
about everything by way of text message. Is there any way to
lawfully get text message content, or is it the same as his cell
phone records?"
Now, when Mr. Hunsaker writes to you, "Is there any way to
lawfully get text messages content, or is it the same as cell phone
records," doesn't that suggest that as of January 28, 2006, that
Mr. Hunsaker already was aware that getting phone records was
illegal?
MR. ALDER. Illegal--possibly, yes.
MR. MARKEY. I think it is clear it is yes. Is the law the same
as cell phone records that you can't get them? So he knows in
January of this year that it is illegal.
Now, Mr. Adler, just 13 minutes after this e-mail was sent to
you, you replied back to Mr. Hunsaker, "Even if we could legally
obtain the records, which we can't, unless we either pay the bill or
get consent, I would highly suspect text messaging records are not
kept due to volume and expense. The only other means is through
real-time interception, an avenue not open to us."
MR. ALDER. Correct.
MR. MARKEY. Doesn't your reply to Mr. Hunsaker indicate
that you, too, were aware of the fact that it was already illegal to
obtain phone records unless you are the person paying the bill or
you obtained the consumer's consent?
MR. ALDER. Correct, sir.
MR. MARKEY. So you believed it was illegal as well in
January?
MR. ALDER. In January, yes, sir. Yes, sir, I had. In January,
yes, I did.
MR. MARKEY. So you believed it was illegal in January.
MR. ALDER. Yes.
MR. MARKEY. And so this is something as a result that had a
long fuse inside of HP, this knowledge that this was illegal
activity. In other words, we don't have to pass any new laws to
make this illegal, it is illegal right now.
And you knew, others knew, and it is clear that, from my
perspective, Mr. Perkins at least came to know that and appreciate
that fact, and it disturbed him greatly.
So I know that we are just at the tip of the iceberg here, Mr.
Chairman, but this is very disturbing testimony that we are
receiving, and, again, I want to congratulate you for conducting the
hearing.
MR. WHITFIELD. Mr. Markey, I would like to comment that
there has been a lot of discussion today about the importance of
passing this pretexting bill that was reported out of this committee,
I guess almost unanimously, but I think the record also does reflect
that existing California law and the Wire Act, the Federal Wire
Act, and the FTC's civil penalties, that it already is illegal. I think
we can make a strong argument--which is the point you were
making.
And I would also just reiterate, as we close up with this panel,
that we hear--we heard a lot of discussion about the Board
members being the subject of this investigation, but I don't think
any of us want to forget that there were nine other people who
were not Board members. They were members of the news media
and other employees of the company that were also investigated.
And, Ms. Dunn, in closing, you have made it pretty clear today
in your testimony that as the Chairman of the Board, the Board
members came to you and urged that you conduct this
investigation. And you turned it over to the management team, the
investigative team. And we have heard a lot about the
investigative team doing the daily work and making the decisions
and setting the techniques and whatever. I understand that team to
be--and I am not trying to put words in your mouth, and you can
correct me if I'm wrong--but the team, in your mind, it was Ann
Baskins, Mr. Hunsaker, Mr. Gentilucci, and who else?
MS. DUNN. For the investigation that was conducted in 2006,
the team, the investigative team, was headed by Mr. Hunsaker
reporting to Ms. Baskins. The only other names that I knew before
today or recently were Mr. Gentilucci and Mr. DeLia. I don't
know who else was on the team.
MR. WHITFIELD. So from your perspective, when you talk
about the team, the investigative team, it is those four people.
MS. DUNN. To my knowledge, yes. There may have been
others.
MR. WHITFIELD. Okay. Now, just one final point here. And
we have gone over this a couple of times, but on Wednesday,
February 22, 2006, Kevin--it is in Tab 62 if you want to look at it.
I think you have already looked at it. There was an e-mail from
Kevin Hunsaker to you, and he talks about this electronic tracer in
this e-mail that they wanted to send to the reporter for CNET. And
I think her name is Dawn, Dawn Kawamoto. And it simply said,
"HP has come up with a name for its next-generation data centers.
Mark is meeting with the WSJ and maybe others on the 27th.
Pulled this from the presentation slides. Jacob."
So this is the Jacob that is the fictitious character and person
who did not exist, and you have already said that the words you
used in replying were not particularly good. And if you had to do
it over again, you wouldn't say it, but you said--"I think this is
very clever--but as a matter of course, anything going outside HP I
hope that Mark--we should have Mark's approval." And then
Kevin wrote back to you on the 23rd, the next day, saying, "For
your information, I spoke to Mark a few minutes ago, and he is
fine with both the concept and the content. We will either send out
this afternoon or tomorrow morning, and I will keep you posted."
Is that your understanding of what happened?
MS. DUNN. I think that reflects what happened, yes.
MR. WHITFIELD. And do you know if Mark Hurd knew about
the tracer technology?
MS. DUNN. I don't know firsthand. I think that is a question
you will have to ask him. I am sorry, I am not trying to be
unresponsive, but it would be hearsay.
MR. WHITFIELD. You said you have heard about hearsay on it?
What hearsay?
MS. DUNN. I have heard a lot of legal terms in the last--
MR. WHITFIELD. But on this issue have you heard--
MS. DUNN. It would be a communication--my understanding,
it was a communication from Mark to the team as reported by me
would be hearsay. So I am simply suggesting that he would be the
better person to respond to your question.
MR. WHITFIELD. But you don't have any other knowledge on
this particular issue except for what is in this e-mail, you said,
other than hearsay, which would indicate to me that you have
heard additional information about whether or not Mr. Hurd knew
about the tracer.
MS. DUNN. What I know is reflected by what is in the e-mail,
and in response to your question about how or what Mr. Hurd did,
I am simply saying it would be speculation on my part as to how
he responded to the team.
MR. WHITFIELD. Can you tell us what this hearsay is?
MS. DUNN. I assume that since they did it, he gave his
approval.
MR. WHITFIELD. You assume. Okay.
MS. DEGETTE. Would you yield, Mr. Chairman?
Did you ever talk to Mr. Hurd about this?
MS. DUNN. No, I did not.
MS. DEGETTE. So you just heard secondhand he had approved
it?
MS. DUNN. That is what I was just trying to say.
MS. DEGETTE. You know, this is not a court of law even
though it might feel like one, sometimes. So you can testify to
hearsay you may have heard.
MS. DUNN. I am trying to be responsive. I just don't want to
put words in someone's mouth that I didn't hear.
MS. DEGETTE. Sure.
With that caveat, what did you hear?
MS. DUNN. What I understood was that since this action went
forward, my assumption is that it was based on what the e-mails
say, which is that he gave his approval.
MS. DEGETTE. Thank you.
MR. WHITFIELD. Well, that concludes questions for this panel,
and I want to thank you all for your patience. And this panel is
now dismissed. And I do want to--if there is not any objection, I
am going to enter into the record at this point the document books,
the two document books.
And in addition to that, I would like to enter into the record the
report by Larry Sonsini's firm regarding this presentation made
before the Board about this investigation dated August 30, 2006.
So without objection, we will enter that into the record.
[The information follows:]
MR. WHITFIELD. You all are dismissed. Thank you very much
for being with us, and at this time this is the final witness of the
day, and that is Mr. Michael--Mark Hurd. Mr. Mark Hurd.
Mr. Hurd, we welcome you to the committee today, and I--
MR. HURD. Thank you. I can't see you.
MR. WHITFIELD. I can barely see you, but I know you are
there.
MR. HURD. Thank you.
MR. WHITFIELD. And we do appreciate very much your being
with us today to shed additional light on this important matter.
And as you know, an oversight investigation takes its
testimony under oath, and I am assuming you have no objection to
testifying under oath.
MR. HURD. Not at all.
MR. WHITFIELD. So if you wouldn't mind standing and raising
your right hand, I will swear you in.
[Witness sworn.]
MR. WHITFIELD. You are now under oath, and under the rules
of the committee and rules of the House, you are certainly entitled
to legal counsel. And if you do have legal counsel with you today
and would like to introduce them, that would be great.
MR. HURD. I have no personal legal counsel. I have some
company counsel.
MR. WHITFIELD. Okay. Well, you are now sworn in, and we
look forward to your testimony, and I recognize you for 5 minutes
for your opening statement.
TESTIMONY OF MARK HURD, PRESIDENT, CHIEF
EXECUTIVE OFFICER, AND CHAIRMAN. OF THE
BOARD, HEWLETT-PACKARD COMPANY
MR. HURD. Thank you, Mr. Chairman, members of the
committee, thank you for the opportunity to appear before you
today.
My name is Mark Hurd. I am with the Hewlett-Packard
Company. I know that you have heard a lot of testimony. I know
you have a lot of questions as a result. Before we do get to those, I
would like to try and provide a larger context to you as to what you
have heard.
And what is really hardest for me to explain is this: HP is a
company that has consistently earned recognition for our
adherence to standards of ethics, privacy and corporate
responsibility, and yet these practices that we have taken such
pride in have recently been violated by people inside the company
and by people outside the company whom we hired.
This committee rightfully wonders what happened. What
began as a proper and serious inquiry of leaks to the press of
sensitive company information became a rogue investigation that
violated our own principles and values. There is no excuse for this
aberration. It happened, and it will never happen again.
Before I do anything else, I want to apologize to those whose
privacy was infringed upon. This includes nine journalists and
their families, two current HP employees, seven former or current
HP Board members and their families. In varying degrees these
individuals were investigated through the use of pretexting, a
technique used to obtain their telephone call information.
In addition to a heartfelt apology, I want those whose privacy
was violated to know that we will soon provide to the victims the
details regarding the information obtained about them, the means
by which it was obtained, and when it was obtained.
I also want to apologize to the employees of Hewlett-Packard,
who on a daily basis carry on their work with the highest integrity.
They are the reasons HP has been recognized so often for their
ethics. This current mess in no way reflects upon the vast amount
of our employees, their work, or their reputation.
The question remains how did such abuse of privacy occur in a
company renowned for its commitment to privacy? And it is an
age-old story that the ends came to justify the means. The
investigation team became so focused on finding the source of the
leaks that they lost sight of the values of this company. They lost
sight of the values this company has always represented.
This company was built on integrity. If Bill Hewlett and Dave
Packard were alive today, they would be appalled. They would be
embarrassed. That is the way the great majority of the people in
our company feel.
Members of the committee, I want you to know that I am not
putting myself above the breakdown that occurred. I wish I had
asked more questions. There are signs which I wish I had caught.
I am responsible for the company, which means I am responsible
for fixing it and leading it forward through this hard time. Our
culture, our core, which we call the HP way, remains strong and
ethical, but clearly changes are in order.
Mistakes will happen, and these are very serious and unsettling
ones that we have been discussing, but what matters ultimately is
how a company addresses the mistakes. HP has taken specific
actions and will take further actions in the days and weeks ahead.
We have accepted the resignation of our previous Chairman
and our General Counsel. Other employees have left the company.
We have appointed a new lead independent director. We have
appointed Bart Schwartz, the former head of Criminal Division of
the U.S. Attorney's Office of Rudy Giuliani, to do an assessment
of current practices and develop future best practices so our
processes will always be legal, ethical, appropriate and without
peer. We are putting into place new measures to maintain the
highest levels of information privacy.
In summary, the big picture of what happened is that we began
an investigation of our Board for leaks and have ended up
investigating our investigation.
I pledge three things to the committee, to our employees and to
our shareholders, and to those whose privacy was violated. I
pledge that I will dig harder and deeper, and I will get to the
bottom of this. I pledge that HP will take whatever steps necessary
to make sure nothing like this ever happens again. And I pledge
that this company will regain not just its reputation as a model
citizen with the highest ethical standards, but we will regain our
pride.
Thank you for the privilege of speaking today, and,
Mr. Chairman, I will be happy to answer questions of you and the
committee.
MR. WHITFIELD. Thank you, Mr. Hurd, and we appreciate
those comments.
[The prepared statement of Mark Hurd follows:]
PREPARED STATEMENT OF MARK HURD, PRESIDENT, CHIEF EXECUTIVE OFFICER, AND
CHAIRMAN. OF THE BOARD, HEWLETT-PACKARD COMPANY
MR. WHITFIELD. After listening to the testimony of Ms. Dunn
all day today, I come away from her testimony with the thought
that she is a particularly strong individual, that she is quite focused,
and from information I read about her, she is pretty meticulous.
And I am sure she was determined to get to the source of the leaks
out of the Board and was successful in doing that.
But she also made it quite clear to us that despite all sorts of
evidence to the contrary--there was all sorts of evidence that she
knew about pretexting early on--and every time we raised that
evidence with her, she said, well, I don't think that is accurate, or, I
don't recall that, or, I have never seen that, or, it was not
mentioned to me, or whatever, whatever. And she did consistently
say, I turned it over to the investigative team.
Now, in your mind--and I guess today it seems like this
investigative team was the only thing going on at Hewlett-Packard,
but I am sure there were lots of things going on at
Hewlett-Packard. And maybe this was not even a priority at that
time, but from your perspective, who was the investigative team
among employees at Hewlett-Packard that were responsible for
this matter?
MR. HURD. I understand, Mr. Chairman. Let me do the best I
can, and the context I would like to provide you is that I started
with the company in April of '05, so there is some time here that
predates my arrival to the company.
Sometime in December, January of '05 there were--I am sorry,
December '04, January '05, there were some of these leaks, I have
come to learn; that as I came to the company, this had created quite
a bit of sensitivity around the Board.
So there was an effort started roughly in that timeframe--and I
think Mr. Sonsini talked to some of that--to begin the process of
trying to investigate those leaks. There's really, two phases as I
have come to understand it now, of this investigation.
The first phase, which you have heard referred to as Kona 1,
really was an investigation that emanated from a private
investigator who had a relationship with the Board. Some of it
actually emanated from the background check that the Board did
on the CEO, meaning me. And that continued on into Kona 1.
That really did not have a lot of HP resources in the investigation,
as you might think about it.
In the second phase, which really started after the Palm Springs
leak that occurred, that actually had a different team on it. So
think of this as two separate teams.
At the conclusion of the Palm Springs meeting, Ms. Dunn
asked me if she could use HP resources to pursue the leak, to
which I said yes.
That is where the second team came in place, where the new
names you hear now would be Kevin Hunsaker and the team
below Kevin. I know this sounds complicated, but there actually
are two different groups.
MR. WHITFIELD. But on Kona 2, the names that she gave are
the four or five--four names that you would identify also.
MR. HURD. Yes, Mr. Chairman. Yes, sir.
MR. WHITFIELD. So you would be in agreement with her on
that?
MR. HURD. Yes.
MR. WHITFIELD. Was it your understanding that they did
report--did they report to you, or did they report to Ms. Dunn?
MR. HURD. Well, this gets to the complexity of the governance
of this. This is just not as straightforward as--I know how much
the committee would like to get at it this way. You have a
Chairman, you have a CEO, and that is me. And the chairman
clearly was appropriately pursuing these leaks. The first set of
resources really did not have anything to do with the company. It
was contractors doing the work.
In the second one, clearly you had a reporting relationship
where Kevin, who you have heard--Kevin Hunsaker reported in to
Ann, but clearly as you look at the documents, there was a lot of
communication going directly to the Board.
MR. WHITFIELD. As we speak today, all of those people have
resigned from the company, is that correct, Ann and Kevin and
Mr. Gentilucci?
MR. HURD. Correct.
MR. WHITFIELD. So those three have resigned.
MS. DUNN. Correct.
MR. WHITFIELD. And then Ms. Dunn has resigned from the
Board.
MR. HURD. Correct.
MR. WHITFIELD. That is a total of four, and that is where it
stands right now is my understanding.
Now, there has been also a lot of discussion today about this
e-mail sent by a character who did not exist named Jacob. And
that was sent to a reporter for CNET. And you probably heard
this, but Kevin had sent an e-mail to Ms. Dunn saying that we want
to do this, and here is what it is, and Mark Hurd is going to be
meeting with the Wall Street Journal, and if she gets this, then we
think we can trace who is doing the leaking.
And she said, it is very clever on your part to come up with that
idea. And we need to get somebody to run it by Mark Hurd before
we do it.
And then Hunsaker wrote back an e-mail and said, well, I
talked to him about it--and I think this is in Exhibit 52, if you want
to look at it in particular, but he basically says, I have run it by
Mark, and the content and concept is fine with him.
And I would just ask you, do you remember having discussion
with him about that or--
MR. HURD. I can tell you what I remember and also what I
have learned, so I will try to bring the two together.
I clearly remember the effort on the part of the team to try to
get some sort of approval on the content of the e-mail. And I think
their view was that if there was going to be information put out
into the market for whatever reason, it needed to be agreed to.
To the best of my memory and to my knowledge, I remember
nothing about spyware or any of the other terms that have been
discussed as it related to the e-mail, but I do remember a
discussion about the content, yes.
MR. WHITFIELD. But you are testifying today that as far as the
details of the mechanics of the way these things work and their real
purpose, you are not really familiar with it?
MR. HURD. To the best of my knowledge, best of my memory,
I do not remember a discussion about that type of methodology.
MR. WHITFIELD. Now, I know that sometime in March,
March 10th, I guess, Mr. Hunsaker prepared a report about this
entire investigation, Tab 72, and in that report he did a pretty
thorough job of everything that was going on in this investigation.
And he sent it to Pattie Dunn, Mark Hurd and Ann Baskins, and in
there he talks specifically about pretexting. And this is after it has
already been--they have already utilized pretexting for their
information. But it is my understanding that you really never read
this report; is that correct?
MR. HURD. That's correct.
MR. WHITFIELD. Were you able to--
MR. HURD. Not my finest hour, Mr. Chairman.
MR. WHITFIELD. But was there any reason particularly that
you didn't read it or other pressing matters?
MR. HURD. I want to make sure I am clear. I am accountable
for everything that is sent to me, and I should be reading it. I pick
my spots where I dive for details. This was not a place that was a
priority for me. It was the day of our shareholder meeting. And,
again, I want to make sure I am clear. There is no excuse for that.
If I had read it, I might have picked it up.
MR. WHITFIELD. From your viewpoint, how significant were
these Board leaks? As the CEO of the company, was it something
that really did--did it really disturb you or--
MR. HURD. I would say--because I didn't have the history, Mr.
Chairman, I did not have the history of the December, January
time frames. And during my time as CEO, we were not
encountering a significant number of leaks, so I was probably not
as concerned as some.
MR. WHITFIELD. Okay. I am not here to defend you in any
way, and I will say that as a Member of Congress representing
650,000 people, there are a significant number of reports and
letters that I do not read for one reason or the other, and I am not
defending you, because I do think that the way that this issue has
come up was certainly much different than anyone intended at HP.
I am quite confident of that. And it has tarnished the reputation of
the company, and I think it certainly violated the standards of
conduct of the company.
At this time I will recognize Ms. DeGette for 10 minutes.
MS. DEGETTE. Thank you, Mr. Chairman.
Mr. Hurd, did you have the opportunity to hear the testimony
of the previous panel?
MR. HURD. I heard some.
MS. DEGETTE. Now, in early January, that was the first you
heard about this investigation of Board members and the leaks,
correct?
MR. HURD. Just clarity, early January of '06?
MS. DEGETTE. Yes.
MR. HURD. No. I would say that when I first came to the
company, there was discussion about the leaks. I can't give you
specifics in that April, May timeframe the first few weeks I was
there. But in July, as I was leaving town, there was a meeting that
was designed to plug the leaks.
MS. DEGETTE. But in January, that is when Ms. Dunn came to
you and she said, we are continuing the investigation, can we use
the internal resources, right?
MR. HURD. Yes.
MS. DEGETTE. And you said okay. After that, what did you
know about the ongoing investigation? Did you know about the
searches of the trash?
MR. HURD. No.
MS. DEGETTE. Did you know about the monitoring of HP
employees and of--or, I am sorry, of Board members and their
families?
MR. HURD. No.
MS. DEGETTE. Did you know about the monitoring of
reporters?
MR. HURD. No.
MS. DEGETTE. No one ever told you about any of this?
MR. HURD. No.
MS. DEGETTE. Did you know about the pretexting that was
going on?
MR. HURD. No.
MS. DEGETTE. You didn't know about the whole Jacob
incident?
MR. HURD. No. Let me go back to my previous testimony as
we go through these. To the best of my knowledge, I do not
remember any of the first points that you brought up.
MS. DEGETTE. Okay.
MR. HURD. The issue about the e-mail, I definitely knew about
the content of the e-mail that was going out. There was clearly a
communication.
MS. DEGETTE. Did you know about the fake person, Jacob?
MR. HURD. Yes, I knew about the objective.
MS. DEGETTE. What was your view of that? Did that seem
ethical for the investigators to be coming up with a fake individual
to be e-mailing reporters?
MR. HURD. Let me try to tell you what was going through my
head at the time. I certainly was trying to--this was a team that
was--
MS. DEGETTE. I only have 10 minutes. I am really sorry, yes
or no?
MR. HURD. At the time, I agreed with the content of the
e-mail.
MS. DEGETTE. So you thought that was just fine?
MR. HURD. It was appropriate to find the leak.
MS. DEGETTE. To be having fake people e-mailing reporters.
Do you think that today?
MR. HURD. With the benefit of hindsight, I wouldn't do it
again.
MS. DEGETTE. Did you hear when I asked Mr. Sonsini if all of
these techniques, some of them though they may be legal or ethical
for a major corporation like you--
MR. HURD. I agree.
MS. DEGETTE. --you agree none of these are ethical?
MR. HURD. I believe there is a difference between legal and
ethical.
MS. DEGETTE. Do you think that HP should have been using
techniques--
MR. HURD. No.
MS. DEGETTE. --like that to investigate leaks? No?
MR. HURD. No.
MS. DEGETTE. Thank you.
You said that a lot of things broke down here, and that you are
trying to fix that. So I kind of want to go through where the
breakdown was. First thing is that we have heard that it is very
unusual to have a Nonexecutive Board chair; is that correct?
MR. HURD. I wouldn't call it unusual, but it is not common
practice.
MS. DEGETTE. Ms. Dunn says it is not done very often, and
because she was not paid like a CEO, she had no real responsibility
to oversee what was under her in terms of the investigation. Do
you agree with that?
MR. HURD. I--I--
MS. DEGETTE. Do you think that because of the structure, that
she was the Chairman without being--just being an independent
Chairman?
MR. HURD. I believe it is not as simple a governance model as-
-
MS. DEGETTE. Don't you think that the Chairman of the Board
should have the same ethical obligations whether or not she is an
employee of the company?
MR. HURD. There is no question about that.
MS. DEGETTE. Okay. So that is not really--I mean--just that
structural function, that is not why there was a breakdown, right?
MR. HURD. I agree that there is no difference in ethical
behavior no matter whether you are a nonexec chair, a chair exec,
COO, at any level of the company.
MS. DEGETTE. I suppose you would also agree that the
Chairman of the Board would have an ethical obligation, if she saw
unethical things happening in an investigation of her own Board
members, she would mention it to someone like, say, the CEO,
correct?
MR. HURD. Certainly.
MS. DEGETTE. Did she ever mention it to you?
MR. HURD. No.
MS. DEGETTE. Take a look at Tab 29. This is the initial
briefing slide show we've been talking about with--
MR. HURD. Let me catch up to you.
MS. DEGETTE. Have you ever seen that document?
MR. HURD. I have now.
MS. DEGETTE. Had you seen it at the time?
MR. HURD. I had not. This is basically the draft--no, I'm
sorry, let me back up. No, I had not seen this document.
MS. DEGETTE. Okay. This is the one that talks about pretrash
inspection and so on. No one ever gave you that?
MR. HURD. To the best of my memory, I never saw this
document.
MS. DEGETTE. That's the first red flag. Take a look at Tab 60.
I'm getting ahead of myself. Tab 30.
This is the senior management briefing on Project Kona 2 that
we were also talking about earlier. It's a very similar briefing,
talks about some of the same techniques. Were you ever given
that?
MR. HURD. No. To the best of my knowledge--
MS. DEGETTE. Even though it's a senior management briefing,
you never saw that?
MR. HURD. No.
MS. DEGETTE. Now take a look at Tab number 60. This is the
e-mail communications between Ann Baskins and various people
about the Jacob situation. And you have to start from the second
page and go on, where--and part of that was--did you hear me, did
you hear me when I was talking to Ms. Dunn about how she had
said that they had to have your approval of this?
MR. HURD. Yes.
MS. DEGETTE. And did anybody come to you for approval of
this?
MR. HURD. This would have been the first I would have seen
of it that said, "Hi Mark," the e-mail that says 2/22.
MS. DEGETTE. Did you see the whole e-mail exchange?
MR. HURD. No.
MS. DEGETTE. What I'm saying, on 2/22, when you saw the
Hi Mark e-mail, the other e-mails that say Hi Ann and Pattie and
the rest, you would have seen those because they would have been
attached to the e-mail exchange, correct?
MR. HURD. Can I just read it for one second?
MS. DEGETTE. You betcha.
MR. HURD. I don't remember seeing this, but I agree that I
possibly could have.
MS. DEGETTE. And at that time, you didn't see anything
wrong, as you had testified earlier, with this whole Jacob situation?
MR. HURD. I definitely remember the content,
Congresswoman. I do remember it; and I agreed with content.
MS. DEGETTE. Okay. Now, take a look at Tab 72. Are you
there?
MR. HURD. Yes.
MS. DEGETTE. Now, I think this is the document that the
Chairman was just talking to you about, the draft of the
investigation report, which you said that you frankly didn't read
because it was the day of your shareholders' meeting and it was a
mistake, right?
MR. HURD. Correct.
MS. DEGETTE. Now, here's my question to you is, didn't you
think that leaks at the Board level were a very serious problem for
the company?
MR. HURD. You know, Congresswoman--
MS. DEGETTE. Because Ms. Dunn certainly did.
MR. HURD. I know that she did, and I appreciate that concern.
And I am not a supporter of leaks in any way, shape or form. I will
tell you though, in terms of the priorities of the Hewlett-Packard
Corporation at the point in time, this was not the CEO's number
one priority.
MS. DEGETTE. Okay. The reason I just showed you all these
documents, and there are more, is because you had testified earlier
that there were--that the rules broke down. I see all of these as red
flags in the organization that were never caught by anybody at the
CEO level on down. And I'm wondering if you can tell me how
on earth we have such a huge breakdown. I mean, you've been in
corporate America for a long time; have you ever--number one,
have you ever seen an investigation of corporate board members
that involved these kinds of tactics that were involved here?
MR. HURD. Congresswoman, I've seen a lot of stuff in my
career.
MS. DEGETTE. So your answer would be yes?
MR. HURD. No, I don't think I've seen anything like this. And
there is two ways processes break down; they break down because
of bad processes that don't have checks and balances, and they
break down because of poor execution. Those are the two ways.
We broke down here in both.
MS. DEGETTE. Okay. My question, though, is you broke
down in both, but there were regular flags aplenty. Why was it
that nobody in senior management of Hewlett-Packard caught any
of these red flags?
MR. HURD. I'll speak for myself, I didn't catch them.
MS. DEGETTE. Why?
MR. HURD. Some was it was attention to detail, as you
described. There is another piece of it that I will tell you from a
checks and balances perspective, and a company of our scale, we
have 151,000 employees, we're kind of a small city almost and
have all the issues that go on in that size of an institution. The
CEO cannot be the backstop for every process in the company.
The processes have to be pushed into the organization with clear
checks and balances and clear accountability. We broke down in
both.
MS. DEGETTE. Mr. Chairman, I would just ask unanimous
consent if Mr. Hurd would be willing to supplement his answer
once the internal audit is completed, to let us know what internal
checks and balances had been in place, because frankly this was a
breakdown not just at the CEO level, but at every level of the legal
department and senior management.
MR. WHITFIELD. Thank you.
Mr. Walden.
MR. WALDEN. Thank you. Welcome, Mr. Hurd.
When Ms. DeGette showed you Exhibit 60, I think I heard you
say that February 22nd was the first time you heard of the e-mail
sting operation; isn't that right? That was at Tab 60. Your
testimony a few minutes ago was that--
MR. HURD. It was the first that I remember.
MR. WALDEN. It was the 22nd of February. Could you turn to
Tab 52? In an e-mail from Pattie Dunn to Ann Baskins and Kevin
Hunsaker, with the subject line of Konas, on February 9th, she says,
and I quote, "I spoke with Mark, and he is on board with the plan
to use the info on new hand-held leader. He also agrees we should
consider doing something with the adaptive enterprise branding
issue, given there is some chance that D.K. will seek clarification
on this from her CNET source. Regards, Pattie." Are you the
Mark in that e-mail?
MR. HURD. Yes, I am.
MR. WALDEN. Does this refer to the Jacob e-mail?
MR. HURD. No. It may have been using the same name Jacob,
but they were two separate content subjects; one was the Next
Generation Data Center, the first was the handheld person in the
organization who would be brought out.
MR. WALDEN. But does this relate to the e-mail that would go
to the reporter with false information?
MR. HURD. Congressman, I want to make sure I'm clear with
you. I can't give you the detail of how the delivery, what was
combined and not combined and what the methodology was. I do
remember this content, yes.
MR. WALDEN. So this was talking about what would go to
D.K., who is the reporter--
MR. HURD. One of the two subjects that would go potentially
to the reporter.
MR. WALDEN. Right. I guess the point is you told us February
22nd is the first time that you're aware of this e-mail, and actually
this was a February 9th e-mail to you about a conversation--
MR. HURD. I was trying to divide the two subjects, but I accept
your point.
MR. WALDEN. Okay. So you probably knew before February
22nd?
MR. HURD. February 9th was the discussion about the
hand-held, yes.
MR. WALDEN. You've undoubtedly heard the testimony by
Ms. Dunn, who took no blame for this. I mean, she was asked very
clearly by my colleague, Mr. Stearns, do you accept any
culpability, any blame, she said no, and basically pushed it off on
Ann Baskins as legal counsel, or others in the management side.
If she had no blame, and it was Ann--do you think it was Ann
Baskins' fault, was she in charge?
MR. HURD. Congressman, I want to make sure I'm clear with
you, I'm in charge of the company.
MR. WALDEN. So it wasn't Ann Baskins--
MR. HURD. I'm responsible for HP, Pattie was the Chairman.
Responsibility goes across the entire company, Congressman,
including myself.
MR. WALDEN. So why did Ms. Dunn resign?
MR. HURD. After deliberations from the Board, and the Board
decided to change the leadership of the Board.
MR. WALDEN. They asked for her resignation?
MR. HURD. Yes, sir.
MR. WALDEN. Why, if she wasn't to blame?
MR. HURD. Well, I'm back to Board deliberations,
Congressman. And I think there was a combination of effects,
some of which was the concern about the ability to lead the
company going forward, lead the Board going forward, given what
had transpired.
MR. WALDEN. All right. In the Sonsini interview with Ron
DeLia on Kona 1, which is Tab--we'll get you the number here,
sir--115, item number eight.
MR. HURD. I'm sorry, I've got to go to another book.
MR. WALDEN. I understand.
MR. HURD. I'm sorry for that.
MR. WALDEN. No, we appreciate the willingness of you all to
make all these documents available.
On number eight it says, "DeLia recalls a specific meeting in
Palo Alto in July 2005, in which he met with Dunn, Ann Baskins,
Mark Hurd, Jim Fairbaugh, Kevin Huska, Tony Gentilucci
regarding the investigation. When DeLia arrived for the meeting,
Baskins, Gentilucci, Fairbaugh and Huska were already in the
meeting. When DeLia arrived, Hurd was not in the meeting; he
appeared to have stepped out temporarily, but he stepped back a
few minutes later. DeLia did not recall whether Hurd was present
for any discussion of phone records."
Do you recall if you were there for a discussion of those phone
records?
MR. HURD. No. But I remember the meeting, it was the day of
a Board meeting, the Board meeting was either still going on or
ending. I was relocating--I know you have a limited amount of
time, I was relocating back home. I was just going back home
because I was still living in Ohio. And I had to leave early, got
there late, and that's what happened.
MR. WALDEN. So you don't remember any discussion about
methodology?
MR. HURD. I really don't. Clearly the focus in the meeting
was that they had not figured out who the leak was.
MR. WALDEN. Okay. And that was on Kona 1.
MR. HURD. That was Kona 1.
MR. WALDEN. And then we go on to Kona 2. And again, you
heard this, I mean, I'm trying to sort out--who made the decision
that allowed this to go forward? Because we all sort of thought
Ms. Dunn did, but I didn't get the impression that she thought she
did, and then she sort of said you--
MR. HURD. Let me make sure I am very clear with you on my
opinion. This was a leak at the Board level, Pattie took it very
seriously. And by the way, let me add, appropriately. She came to
me and asked to be able to use HP resources, which came into the
legal department, which is where the name Ann Baskins comes in.
Pattie then was the business owner, I would describe it, of all of
that, using HP resources to go execute.
MR. WALDEN. And I guess what I was troubled about was we
had a lot of e-mail traffic back and forth to the investigators from
her on pretty specific levels, and yet when we ask her about her
involvement, it seemed to be it was a 30,000 foot level, and yet
she's naming the name of the investigation, she's providing phone
numbers, there are other e-mails from people saying she wants
very specific things in the report, techniques, resources, but she
doesn't have any recollection of any of that. Do you see why
we're troubled by what we're hearing?
MR. HURD. I can understand why you're troubled by the whole
thing; I understand, Congressman.
MR. WALDEN. And did you ever think that there would be--
what I asked about access to public--that she thought you could
just get somebody's phone records through public means? Did you
believe that was possible, that I could just somehow--
MR. HURD. I would be speculating. I'm not just an expert in
this area. I've come to learn a lot, and I'm very--
MR. WALDEN. I mean, come on, did you ever think you could
just pick up a phone somehow and get my phone records or I could
get yours?
MR. HURD. Congressman, it wasn't something I thought
about; and I'm sorry, I just can't give you a comment on that.
MR. WALDEN. I can't imagine that that would be legal or
appropriate--would you think it's appropriate?
MR. WALDEN. I would not want somebody, without my
permission, to have my cell phone bill.
MR. WALDEN. Or your cell phone records?
MR. HURD. The cell phone records or cell phone bill. I wasn't
trying to be cute with my answer.
MR. WALDEN. If you could turn to Exhibit 77. This e-mail
states that Tom Perkins called you before the March 2006 Board
meeting and asked you about the status of the investigation. Do
you recall that conversation with Mr. Perkins? And I'll let you get
caught up there, sir.
MR. HURD. I have a different--I have something that says
Kevin Hunsaker to Tony Gentilucci under 77.
MR. WALDEN. Right. And it says on the second paragraph,
"It's also worth noting that a few days before the March 2006
Board meeting Perkins called Mark Hurd and asked him, among
other things, about the status of the investigation of the leaks.
Hurd told Perkins the investigation team had assembled a
significant amount of circumstantial evidence but that he was not
sure where it would ultimately lead." Do you recall that
conversation--
MR. HURD. No.
MR. WALDEN. Is that accurate? Because according to this
e-mail, you apparently knew enough to tell Mr. Perkins what
evidence the investigation uncovered.
MR. HURD. Well, remember just in timing wise, this e-mail
would be posted when I knew the answer. So it went back to the
meeting in Los Angeles, where I received here is the answer. And
that meeting really reflected on who is your leaker. At roughly this
timeframe, it would be logical that I would have known where the
leak was coming from.
MR. WALDEN. And would you have ever asked how they got
that information?
MR. HURD. Again--
MR. WALDEN. It just wasn't--
MR. HURD. I want to make sure I'm clear, I should have, I
should have.
MR. WALDEN. I guess the thing we're struggling with is the
public policy issue about pretexting, you know that, but also about,
in a corporate environment, we haven't been able to figure out who
should have asked this question and didn't. And there are a lot of
people who show up that knew about it and other--you know, Mr.
Adler and Mr. Nye and a few of them said wait a minute, this isn't
right.
MR. HURD. Congressman, first of all, I appreciate exactly what
you're saying. We have got to push this accountability further
down in the company, but I don't want to stop, I should have been
able to catch it, I didn't.
MR. WALDEN. I understand. Thank you.
MR. WHITFIELD. The gentlemen's time is expired.
Mr. Inslee, you are recognized for 10 minutes.
MR. INSLEE. Thank you. You talked about when checks and
balances break down things, really go awry. Working in the
Federal government, I want to tell you I can empathize with that.
MR. HURD. Congressman, I'm glad of where I am most of the
time, maybe not today.
MR. INSLEE. You know, there has been a lot of bright days for
HP, and you've done some great work for our economy and people
in general, and there is going to be a lot of bright days--this is not
one of them, of course, not your finest day of this great
organization. And when organizations go awry, like I think
happened here, sometimes it makes sense to do a little penance and
help the cause out to try to see to it that we reduce this from
happening again in your community. Now the situation here in
Congress is this committee, as you have heard, has passed a bill to
give the Federal Government tools to prevent illicit pretexting that
you have run afoul of, or the organization has run afoul of.
We can't get the Speaker of the House to schedule a vote on
this bill. I think it might be helpful if you called the Speaker of the
House this afternoon and suggested to him that he schedule this
bill since you have learned that this is not a real positive thing for
American corporations or the economy or privacy in general.
What do you think of that idea?
MR. HURD. Do you think he would take my call?
MR. INSLEE. You bet he would take your call. And he should
take your call because you're a leader of a major corporation that's
a major technology leader. And I'm very serious about this, we
need to send a message to the country that we're going to stop this
from happening.
MR. HURD. Congressman, I don't want to be trite with my
comment, we are out in support of making pretexting illegal,
creating clarity. And I don't want to hide behind the lack of clarity
either, because there is a difference between legality and ethical
behavior, and we don't want to confuse the two. We have a
standard of business conduct that this violated, regardless of any
clarity around legal issues. But I understand your point, and we're
going to take efforts to support the legislation.
MR. INSLEE. I really do believe that can be helpful.
MR. HURD. You have our support.
MR. INSLEE. And I appreciate that.
I wanted to ask you about the tracing technology and its use by
HP and what your current corporate policy is.
Mr. Adler suggested that this had been used in other contexts--
as I understand his testimony, that it's been used in this context of
trying to track down a leak in Board members, but also had been
used by HP targeting other non-HP personnel on occasion. Are
you familiar with what other occasions that has been?
MR. HURD. I believe that what Mr. Adler was describing about
the use of it in other projects. We are currently going through a
process right now to go directly at any use of a technology like
that. I'm not intimate with that technology, several others I am.
I'm not sure as we go into the future, we will be comfortable with
the use of technology like that. It's a process we're going to
review. And one of the reasons I mentioned in my statement our
hiring of Bart Schwartz is to go through the process to make sure
in every investigation we are behaving properly and appropriately
as we go forward. So we will put lots of energy into this,
Congressman.
MR. INSLEE. Are you familiar whether or not HP has used this
technology against other non-HP targets?
MR. HURD. This tracer technology? Congressman, I have no
evidence of that, I have no knowledge of us using it against a
competitor or in any improper way, I have no knowledge of that.
But as I said earlier, we're going to dig in toward the bottom of
everything.
MR. INSLEE. Speaking for the 600,000 people I represent, I
think their expectations of privacy is that a corporation would not
use tracer technology to try to follow where they send e-mail or
where they send attachments to report back to that corporation
without their specific approval. That's the expectation that my
constituents have.
Do you believe that HP should follow--and major corporations
or minor corporations--should follow that privacy examination?
MR. HURD. I think for us at HP, it is not important for us to
follow but to lead. And it's important for us to be a leader. And
we have been a leader in consumer privacy. We are a leader in
consumer privacy. This is an aberration to us. We need to make
sure we're checking every process, not just with our customers, but
internally, whether it's an investigation, use on our people, in any
way, shape, or form to making sure we're appropriately dealing
with things, which we will do, Congressman.
MR. INSLEE. Well, I hope do you so. And I hope that includes
helping Congress to move forward on privacy legislation.
I think this hearing is peeling back a layer of an onion that's
very disturbing, and that we need to do more work on privacy here
in Congress. And I hope that you will put your corporate resources
behind efforts in that regard so that others do not fall victim to this.
I don't believe this should be left just to the whims of the CEO of
these particular corporations. We need total clarity of this situation
so that no others have to depend on the good graces of whatever
management we have. And I hope you would render your weight
to that effort and become a leader on this.
MR. HURD. Congressman, we actually believe we have been a
leader, and that's what is so disappointing about this. We actually
believe we've been a leader to point out where consumer privacy
should be and should go. We've got many people in the company
that all they do is focus on privacy, around our products, our
solutions; makes this even a bigger disappointment.
MR. INSLEE. I appreciate what you're saying, but I'm
suggesting that--and that is a good statement--but HP's leading
legislative efforts to try to solve this problem is a next step that I
would encourage you to consider.
MR. HURD. I couldn't agree with you more. We want to be
that leader, Congressman.
MR. INSLEE. Thank you.
MR. WHITFIELD. Dr. Burgess--no, Mrs. Blackburn of
Tennessee is recognized for 10 minutes.
MRS. BLACKBURN. Thank you, Mr. Chairman. And I want to
thank our witness for being here with us.
I will tell you, quite frankly, listening to all of this today and
spending yesterday going back through all the evidence, looking at
the chain of e-mails, looking at the memos, it certainly provides a
basis to us to believe that there were some folks at HP that
certainly knew that they were pushing the envelope and they were
skirting the edges. So I've got a few simple questions, and then
I'm going to yield my time back. But Mr. Hurd, I want to know if
you can tell me when was the first time you ever heard the term
pretexting.
MR. HURD. To the best of my memory, it was in a memo or
e-mail that went from Larry Sonsini to Tom Perkins that was in
the--I'm going to say in the summer--it's in your documents, it's
got to be--
MRS. BLACKBURN. It's Number 91. We know these now.
We're very familiar with this documentation.
So this is the June 28th, 2006 memo. And this was the first
time you ever heard the term pretexting? Who did you turn to to
define the action of pretexting for you?
MR. HURD. What transpired, if you want this background--
MRS. BLACKBURN. Yes, please.
MR. HURD. Is that this resulted in a series of e-mails back and
forth that are in your documents, where eventually not only did we
uncover the term pretexting, but what surfaced within the next 3
weeks or so was a letter from a phone company that not only
described the term pretexting, but described actually what
happened. That trigger was the first specific trigger I'd had that
this was wrong.
MRS. BLACKBURN. So you were this far into the Kona project
and the Jacob project, and you didn't realize what pretexting was.
And you had never, through this entire process, turned to
somebody and said, tell me what this word pretexting is? I did not
have that in vocabulary when I was in fifth grade or at Baylor
University when I was in freshman English.
MR. HURD. I don't remember it in freshman English--
MRS. BLACKBURN. You would have never have heard it. I'm
trying to figure out who you would turn to and whose advice you
would ask to define the term and the action to know what this
really was. And Mr. Hurd, the reason I'm doing this is not to be
flippant with you, because I think as we live in this world where
e-commerce is very much a part of our day and technology very
much a part of our day, being certain that the statutes and the rules
under which business operates each and every day and being
certain that the leaders in the field, all the stakeholders understand
is tremendously important to us. So that is why I had that
question.
Now, let me ask you this, also. There seems to be
disagreement between Ms. Dunn and you as to who actually said,
the buck stops with me, and I'm making the decision.
MR. HURD. I will speak for no one else, that in
Hewlett-Packard operations and strategy and everything else that
goes on in HP, eventually the buck stops with me.
MRS. BLACKBURN. So you're the one responsible for ordering
the investigation and the spyware technology, the tracer, if you
will?
MR. HURD. No, I didn't do that. But that said, in the end, I'm
responsible for everything that goes on at HP.
MRS. BLACKBURN. All right. Great.
Who actually made the decision to put the tracer--
MR. HURD. Well, I'm sure--I'm going to tell you what I think.
My belief is the investigative team had a set of processes that they
used. They were trying their best to fulfill the objectives that the
Chairman had set forward, and that's what they did, they went and
executed around that.
MRS. BLACKBURN. Who is running HP's investigative team as
of right now today?
MR. HURD. As of now, we have an open position.
MRS. BLACKBURN. An open position?
MR. HURD. We are looking for qualified candidates,
Congresswoman.
MRS. BLACKBURN. Sir, I have no doubt you are.
Is HP investigating or using spyware on or pretexting anyone,
either an employee, a competitor or a Board member today and at
this time?
MR. HURD. I have set up very clear instructions that any
activity that you have described on the specifics of pretexting is to
be ceased, and if anyone is confused they can call my extension.
MRS. BLACKBURN. And does that apply to spyware technology
also?
MR. HURD. The spyware technology--I only put the caveat on
it, as Fred described, there are a couple of dimensions to the use of
this technology. I'm going to go back directly and make sure I
look specifically at every use of that kind of--I think as you called
it, send-receive technology and make sure that we have absolute
clarity.
MRS. BLACKBURN. So people that you were running pretexting
work on or people that you were running tracers through their
correspondence, you have ceased that at this point in time?
MR. HURD. There is no--could you put your question one more
time, Congresswoman, to make sure I got it right?
MRS. BLACKBURN. Did you stop offending; did you stop the
tracer technology, the spyware technology to pretexting?
MR. HURD. We are stopping anything that isn't appropriate or
ethical in the company. What we're looking for right now is why;
we have got an investigation going on through the company that is
still not complete.
MRS. BLACKBURN. Okay, great. The Kona project briefing
that has been referred to by my colleagues a couple of times, who
actually prepared that?
MR. HURD. I'm sorry. Which Kona briefing? Kona 1, 2?
There were a multiple of the briefings.
MRS. BLACKBURN. There is two, who prepared them?
MR. HURD. Would have been the investigative team. But the
Kona 1 briefing, that was the one at the conclusion of it, I believe
would have been prepared by an outside contractor.
MRS. BLACKBURN. By an outside contractor. Have you
terminated all of those agreements with the outside contractors?
MR. HURD. Yes.
MRS. BLACKBURN. And like Action--the different companies,
how long have you had these investigative agreements with Action
and some of these that we have in our documents?
MR. HURD. There are two sets of contractors. There is a
subcontractor, and then I think there are actually a series of
subcontractors to that subcontractor that we actually would not
have an agreement with. We would have an agreement with the
original subcontractor that has been terminated. I believe that the
subcontractor in question had been working with Hewlett-Packard
for roughly 8 years.
MRS. BLACKBURN. For 8 years. All right.
Well, Mr. Chairman, I'm going to yield back. Thank you.
MR. WHITFIELD. Thank you, Ms. Blackburn.
At this time, I would recognize Ms. Eshoo for 10 minutes.
MS. ESHOO. Thank you, Mr. Chairman. And good afternoon.
MR. HURD. Hi.
MR. WHITFIELD. Ms. Eshoo, excuse me. Mr. Burgess has not
asked his questions, he is a member of the subcommittee, so --
MS. ESHOO. Absolutely, I'll wait.
MR. BURGESS. I'll yield to my friend from California.
MR. WHITFIELD. He yields to you, so--he is such a polite
fellow. So go ahead.
MS. ESHOO. Thank you. Well, it's been a long day, and I
think that you have the advantage of being last because everyone is
somewhat exhausted. But nonetheless, there are still, I think, some
questions to be asked.
Let me just comment first that--and I've said this with each
group that has come in. For me, this is a sad day, I think it is for
you as well. I keep thinking of the thousands of employees who no
doubt have tried to access this at some point during the day on
C-SPAN, so many of them are my constituents. They have worked
hard to not only help make the company successful, they have a
real investment in it, a great sense of pride, and I share that with
them, and I think that you do as well.
This really needs to be cleared up. I don't think there can be
anything that's lingering at the end of this. And I hope that there
isn't, because it's something that needs to be thorough. The
sunshine is really a disinfectant, I believe. One of our members,
the distinguished Ranking Member of the full committee, uses that
phrase a great deal, and that's what this process is about.
You're one of the survivors of the key people in this. Very
distinguished General Counsel is gone, distinguished Chairwoman
of the Board, gone. Mr. Hunsaker, the ethics officer of the
company, gone. Mr. Gentilucci--I cannot remember his exact title,
you know what it is--gone. And so I think with the individuals that
are here, even Ms. Dunn did testify during the longest stretch of
today's hearing, there are gaps, there are still a lot of gaps.
Now I asked Mr. Adler, whom I don't know, either couldn't
hear me or hasn't worked at HP long enough to have an
institutional history of how HP is operated, so let me start with the
questions that I asked him.
How long has HP had a contract or retainer or retained SOS,
ARG and the other outfit, Eye in the Sky I think is the name of it?
MR. HURD. The contract relationship, as I mentioned, was
roughly around 8 years.
MS. ESHOO. And was it mostly with SOS, or all three?
MR. HURD. That's my understanding.
MS. ESHOO. Do you still have a contract with them? Are they
still on retainer?
MR. HURD. No.
MS. ESHOO. Are you going to have any contract with outside
investigators? Your answer is probably going to be no, given this
experience.
MR. HURD. I think what we're going to do is get the best in
class processes, Congresswoman, to make sure we understand how
investigations, if they need to be done, are done, so they meet the
level of our ethical standard as well as our--
MS. ESHOO. What did they do for 8 years ?
MR. HURD. I don't know, Congresswoman, they did many
investigations over that period of time.
MS. ESHOO. In reading the background and preparing for this
hearing, one of the breakdowns was the use of Social Security
numbers. That's a huge violation, I have to tell you, in my view,
which really goes after someone's privacy. You have a Social
Security number, first of all you're holding gold, you're holding
gold. Someone filed a fraudulent tax return in my name, and it
was because they somehow got my Social Security number. So
Social Security numbers are really the golden key that can open the
door so that people can get a lot.
Can you explain to us from your investigation of the
investigation how many Social Security numbers were used from
inside the company to access information?
MR. HURD. I do not yet have a complete report on how many.
Clearly there have been an effort to gather at least a couple that
I've seen, which we're still not to the end of the trail. So certainly
there have been a couple. And as I pledged to you earlier, we will
dig to the bottom of it.
MS. ESHOO. Mr. Chairman, is that going to be requested as
part of the record for this hearing?
MR. WHITFIELD. Would you repeat that question?
MS. ESHOO. I was asking Mr. Hurd about the--no one brought
this up today--but part of what I've read is that Social Security
numbers were used internally in HP in order to obviously go out
and secure information. So Mr. Hurd doesn't know from the
investigation into the investigation what the answer to my question
is, and I asked if that would be requested from the committee to be
made part of the record. I think it is an important part of it.
MR. WHITFIELD. Absolutely. Without objection, yes.
MS. ESHOO. Let me ask you this; does the Chair of the Board
have the authority to initiate activities and to commit company
resources?
MR. HURD. That's one of those issues of governance. I mean,
you get down to the fact that the Chairman of the Board certainly
can commit company resources, depending on the interpretation of
what resources are being committed.
MS. ESHOO. Did Pattie Dunn commit HP resources for this
investigation?
MR. HURD. The best thing I can tell you, Congresswoman, is
the second phase, being Kona 2, which is when I was in place.
Pattie did not. Pattie asked me if she could now engage with HP
resource, which she--
MS. ESHOO. So there isn't a firewall there. The description of
the Chair of the Board as it applies to HP seems to be just a little
different. There are other models that are the same, but I think
there are others that are more common to one another than what
was described today.
But when you said Pattie took it seriously, I have to tell you
that that sounded to me as if there was one person that took it
seriously and went out on their own to do this. And I have to tell
you--this is just the way it struck me --
MR. HURD. Can I clarify that?
MS. ESHOO. Pattie took it seriously. It seems to me that there
were several members of your Board that took it seriously.
MR. HURD. If I said it that way, I mischaracterized it. This
was a very serious issue. Leaks coming out of the company about
strategy, about operations --
MS. ESHOO. I think so.
MR. HURD. This is a very serious issue. And I want to make
sure I'm clear to everyone, it's unacceptable, it's unacceptable at
Hewlett-Packard. We can't have that and run a company
successfully. So I want to say one more time, Pattie appropriately
took it seriously. I was only trying to make a comment relative to
the abrogation of priorities in the company relative to what's gone
on across all of Hewlett-Packard. It wasn't my personal number
one priority relative to other things, but don't take anything away
to diminish the importance of it.
MS. ESHOO. To whom does the ethics officer report to?
MR. HURD. The ethics officer reports to our total customer
experience group, which is in our marketing organization.
MS. ESHOO. Are you going to change that?
MR. HURD. We're going to look at the entire process,
Congresswoman, that's what I pledge to you.
MS. ESHOO. You know what I'm stuck by? And we're all
somewhat guilty of this, but I am certainly reminded of it over and
over and over again today. It doesn't seem to me that human
beings sit down and talk to each other anymore. People are
messaging and texting and we don't remember meetings and we're
buzzing and we're wired, and there is all of this information that's
going out there. No one remembers it. It's not used for anything.
And look what's happened. I always want to look ahead, that we
learn from the mistakes that we make, we're all human, it's the
mark of our humanity. And my mother used to say, little people
make little mistakes, big people make big mistakes, and there are
big mistakes in this.
But I think when you reshape all of this, that given the
reputation that HP has had, enjoyed, earned, that an ethics officer
report to the CEO is just a suggestion of mine.
Where did the progress reports of the investigation go to?
Were they shared, did they just go to one person?
MR. HURD. Are you talking on a go-forward basis,
Congresswoman?
MS. ESHOO. No, what you're here for today, the investigation.
Where did the progress reports on this go to?
MR. HURD. Where did they go?
MS. ESHOO. Yes. There were the investigators, outside,
inside, they weren't just given instructions about what to do and
then come up with a report, they must have had progress reports.
Where are those progress reports?
MR. HURD. I want to make sure I'm clear, you're talking about
the actual investigation themselves?
MS. ESHOO. Kona 2.
MR. HURD. There were some updates that went through the
investigative team, and I'm not aware of them escalating beyond
that.
MS. ESHOO. So it stayed in the same circle?
MR. HURD. That is, to the best of my knowledge, what
transpired.
MR. WHITFIELD. The gentlelady's time has expired.
Dr. Burgess is recognized for 11 minutes for being such a
great--
MR. BURGESS. Mr. Chairman, just for the record, we have
heard about our bill that has passed out of committee that has not
been heard on the floor, but I do want to draw the committee's
attention to the fact that we did pass on the House floor H.R. 4709,
the Telephone Records and Privacy Protection Act, that was a bill
of Lamar Smith's out of the Judiciary Committee. And since it
was out of the Judiciary Committee, it probably wasn't as good a
bill as ours was, but I did want to point out that the House has
acted on this concept, trying to provide that context and that bright
line that several people have asked for. Now I know the Senate
has not done so, and perhaps when the conference is held we can
actually conference both bills with whatever the Senate produces
for us.
Mr. Hurd, in your written testimony you say that you don't
recall seeing or approving the use of tracer technology. I guess of
all the stuff we've heard, the tracer software or spyware, whatever
it's called, is really the thing that is most disturbing to me. And
you state that you don't recall seeing or approving the use of the
tracer technology. What was the purpose then, how did you think
this elaborate structure around the e-mail of the fictitious Jacob,
how is it all supposed to work?
MR. HURD. Sir, first, you're correct, that's the best of my
knowledge. But certainly, the objective of it was get whoever it
was that was leaking company information to call back into the
company to validate that whatever information in that e-mail was
accurate.
MR. BURGESS. Let's see. I think it is Tab 62 in the big book,
we have an e-mail exchange. And of course, I have trouble with
e-mail exchanges, you always have to start at the end and then
work up. But basically, the e-mail exchange gives the fake e-mail
or a draft of the fake e-mail that will be sent to Dawn, and it seems
like rather innocuous information, but anyway, it goes right up the
chain to you. Now, it's your testimony, then, that you didn't know
that the tracer software was going to be attached to this e-mail,
this--
MR. HURD. To the best of my memory, I don't remember that.
MR. BURGESS. And I, of course, don't run a large electronics
corporation, so this information seems relatively innocuous, it's
hard to see how the information itself would provide a traceable
event for you, but that's your contention, that someone would call
back in about the next generation data centers?
MR. HURD. Oh, sure, that once that information was to get in
the hands of whoever it was that was interested in leaking
information, they would have to validate that the information was
correct and talk to somebody who would be responsible for that. I
think that's what the team's objective was.
MR. BURGESS. Well, it seems like the team--everyone else on
the team knew about the tracer aspect, but you did not?
MR. HURD. I just don't remember, Congressman.
MR. BURGESS. Okay. In a public statement last Friday you
stated you attended a meeting in July 2005 where Kona 1 was
discussed, where a verbal summary of the second phase of the
investigation was provided, the second phase of the operation
being the tracer software or the fake e-mail?
MR. HURD. Okay. I think let's go back to the two
investigations. What you described are the two phases. The Kona
2 phase is where this e-mail actually occurs. Kona 1 was that first
piece that actually didn't even use this investigative team, it was a
separate team. And that meeting you're describing, I believe, was
a report of their lack of a finding of any type, in that meeting
where none of that was actually involved.
MR. BURGESS. In the July meeting, were you present for the
discussion--any discussion of phone records?
MR. HURD. I don't remember a discussion about that,
Congressman. I wasn't in that meeting all that long, as I
commented earlier.
MR. BURGESS. Let me ask you this; you attended the May 18,
2006, Board meeting; Mr. Perkins resigned.
MR. HURD. Yes.
MR. BURGESS. Mr. Perkins has been outspoken that he
resigned in protest over the tactics that were used in the leak
investigation. Did the company insist--did you insist that the form
8K filed by Hewlett-Packard announcing his resignation fully
disclose the reasons for his resignation?
MR. HURD. Congressman, we always to want file an 8K that
was appropriate and accurate and complete; so that's my first
response.
Secondly, I clearly remember Tom's reaction to what had
transpired. He was bothered by the way the meeting occurred and
the way the meeting was going on, and he clearly made that very
clear in his discussion as he departed.
Subsequent to Tom's departure, physical departure from the
Board meeting, he actually had a phone conversation with Mr.
Sonsini, who you heard from earlier. I was not party to that phone
conversation with Mr. Sonsini. So the 8K itself reflects both what
occurred in the meeting and the conclusions of the phone
conversation between Mr. Perkins and Mr. Sonsini.
MR. BURGESS. Do you think that is an adequate--does that
cover the explanation or is that an adequate explanation for Exhibit
92 that Mr. Perkins wrote to the Board? It seems just from the
tenor of his letter that he's disturbed that there is not a complete
disclosure of the activities that led to his resignation.
MR. HURD. So clearly there is a debate, I accept your point.
The 8K was filed based on the data that I described, the two pieces
of data that I described, what actually occurred in the Boardroom
and the follow-up conversation between the two. To the best of
my knowledge, Congressman, our 8K reflects both what happened
in the Boardroom--and for that one, Congressman, I was there. I
was not at the conversation between Mr. Sonsini and Mr. Perkins.
So the combination of the two are a submission of the 8K. I
understand the debate that occurred, subsequent to the debate that
you see here represented in the documents. Tom also asked that
we look into this deeper, into the investigative methods. That
debate was occurring, as you can see by the documents, into late
July. We subsequently started the investigation upon some of the
evidence that Tom was describing, which led to what has
transpired. So that is really how the flow worked, Congressman.
MR. BURGESS. It's been a long day. Exhibit 96, in response to
your company-wide e-mail on August 23rd concerning standards of
business conduct, one of the Kona investigators, Vincent Nye,
comments, and I quote, "This investigation will be a defining case
which will test the company's claim of having uncompromising
integrity." I think we will both agree it has certainly done that. Do
you feel that going forward you can restore Hewlett-Packard's
integrity?
MR. HURD. Congressman, I will.
MR. BURGESS. What have you done through this process to
keep the employees of your company informed of what has
happened, and that the progress of not just this hearing today, but
your internal investigations at Hewlett-Packard and what legal
liabilities there may be?
MR. HURD. Well, we've made an effort to communicate with
them as often as possible. We've communicated with them about
our changes in governance, the issues around the investigation.
I've been communicating to them frequently. I'll also
communicate to them as soon as I return.
Our employees are great people, Congressman. And I'm not
here to give you a commercial on HP, but I believe this to my core.
The people of Hewlett-Packard are some of the most hard working,
highest level of integrity people around, and we're going to get this
right.
MR. BURGESS. And I sincerely hope that you do because as I
pointed out earlier, 57,000 American jobs, nearly 10,000 of my
home State of Texas and almost 200 in the District that I represent
in north Texas, so it is personally important to me as well, and I do
sincerely hope you are correct.
Can you just answer me this in the 5 minutes or so that I have
remaining; how do you feel that this affects the country's
perception of corporate America? Have we harmed the corporate
image in general?
MR. HURD. It's hard for me to imagine it's been helpful, but I
can tell you this, that one of our founders, Dave Packard, said--
who is quoted quite a bit around corporate America and certainly
around our company--there will never be a time that we don't
make mistakes. And I guarantee you, Congressman, we'll make
more. The defining point will be what we do about them, how we
handle them and refine ourselves as we go forward in the future.
And I promise you we are committed to our core to redefine our
company in a way that not only we can be proud of, but that all
corporate America can be proud of.
MR. BURGESS. Well, on behalf of your employees, your
stockholders and the country at large, I sincerely hope you are
correct. Thank you very much for your attendance at this long
hearing.
Mr. Chairman, I will yield back the balance of my time.
MR. WHITFIELD. Well, thank you.
You know, today's hearing has focused, correctly so, in my
view, on significant shortcomings at Hewlett-Packard that did
involve activity that violated private rights of individuals, that
possibly violated the law, and certainly violated the ethics of
Hewlett-Packard.
But in departing, there is one bright spot that I would like to
just point out once again, and I'm sure you're familiar with this.
Back as far away as last February of 2006, Mr. Vince Nye, whom
I've never met, wrote an e-mail--sent an e-mail to Kevin Hunsaker,
and he says, "Tony, I have serious reservations about what we're
doing. As I understand the methodology in obtaining this phone
record information, it leaves me with the opinion that it is unethical
at the least, and probably illegal. If it is not totally illegal, then it is
leaving Hewlett-Packard in a position that could damage our
reputation, or worse, and I am requesting that we cease this phone
number gathering immediately and discount any of its information.
I think we need to refocus our strategy and proceed on the high
ground." And I think that's an employee of Hewlett-Packard that
needs some sort of recognition--maybe give him the day off or
something.
But with that, thank you for being with us today. And I know
it's been a long day, we appreciate your testimony very much.
And we have the greatest confidence that you will continue to lead
Hewlett-Packard back to its standing and succeed in every way.
With that, the hearing is--and the record will remain open for 30
days. And with that, the hearing is adjourned.
[Whereupon, at 5:34 p.m., the subcommittee was adjourned.]
RESPONSE FOR THE RECORD OF MARK HURD, PRESIDENT, CHIEF EXECUTIVE OFFICER,
AND CHAIRMAN. OF THE BOARD, HEWLETT PACKARD COMPANY