Charges likely in HP case

Criminal charges are likely in the scandal surrounding alleged spying involving the board of HP, according to California Attorney General, Bill Lockyer. But a spokesperson for Lockyer said the investigation could take "months".

Meanwhile, the HP board held a special meeting on Sunday to discuss the fallout from the issue, HP spokesperson, Emma Wischhusen,said.

Chairman, Patricia Dunn, said she would not resign over the scandal and that she was "appalled" that contractors hired to investigate news leaks used potentially illegal methods, according to news reports.

CEO, Mark Hurd, in a letter to company employees that was released late on Friday, urged them to keep focused on their work.

"The media coverage and speculation regarding the recent actions of the HP Board ... have nothing to do with the strategy or operations of Hewlett-Packard," he said.

Hurd, who emphasised that he was speaking as CEO and not as a board member, said: "There has been a long history of leaking company information with the HP board that clearly needs to be resolved."

HP is on the defensive after the disclosures that phone records of HP board members and journalists were hacked to see who on the board discussed with reporters confidential board strategy sessions earlier this year. The company disclosed in a US Securities and Exchange Commission filing last week that investigators, in order to identify the leaker, had used "pretexting", a method in which false pretenses are used to gain online access to others' phone records.

The investigation determined that director, George Keyworth, was the source for a Cnet.com story in January about HP's strategy.

Keyworth was asked to resign from the board in May but refused. Board member, Thomas Perkins, a renowned Silicon Valley venture capitalist, did resign in May in protest over concerns with the HP board's handling of investigations into leaks of confidential information.

The news that the phone records of nine reporters who cover HP were hacked has outraged some in the journalism profession.

"HP. Does that stand for Hewlett-Packard or 'Hackers of Privacy?'" asked president of the Society of Professional Journalists, Christine Tatum, in a statement last week.

"Journalists are not the only ones who should be concerned with this issue," Tatum said, who is a business writer for the Denver Post. "Pretexting could be used against disgruntled customers, employees or debtors."

HP's response that it was "dismayed" that phone records were hacked struck Tatum as insufficient: "This [pretexting] practice amounts to identity theft and a national corporation should be held accountable."

Dunn, in an interview in the Wall Street Journal last Friday, said that while she ordered the investigation of board news leaks, she did not know the investigators hired to conduct the probe used pretexting.

"I was appalled. And I'm going to apologise [to those journalists]," she told the Journal. Because she was also subject to investigation, she said she could not have known what methods the investigators used.

But while she does not plan to resign, Dunn will take into consideration what the board thinks she should do.

"I serve entirely at the pleasure of the board,'' Dunn told the Journal. "If they determine it no longer is in the interest of shareholders [for me to remain on the board] I will do so.''

The criminal investigation of the case continues.

"There has been no final decision [on charges] but we are confident that a crime was committed," a Lockyer spokesperson, Thomas Dressler, said. "The attorneygeneral does not want to sacrifice thoroughness for expediency. The investigation could take a couple of months."

Charges could be filed under a California law prohibiting gaining unauthorised access to computer data or under another law prohibiting identity theft through unauthorized use of personal information, published reports say.

A bill to specifically outlaw pretexting is on Governor Arnold Schwarzenegger's desk awaiting his signature. The governor has until the end of September to sign or veto the bill, spokesperson, Darrel Ng, said.

Schwarzenegger hadn't taken a position on the pretexting bill, but only because it was one of hundreds of bills passed during the recently concluded session of the California Legislature, Ng said.

More about: CNET, Hewlett-Packard, HIS Limited, HP, Securities and Exchange Commission, Wall Street
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