13 Sep Compliance at HP – Pretexting paranoia
Last week on CNBC and other TV news broadcasts, the accusation that Hewlett Packard used pretexting to spy on its board of directors was revealed. Because she was afraid that certain board members were leaking corporate initiatives, HP’s chairwoman, Patricia Dunn, unilaterally authorized a project headed up by some independent electronic security experts and started checking on personal phone records of board members. www.msnbc.msn.com/id/14687677/site/newsweek
On Friday, Sept. 8, it was reported that she would not step down unless the board asked her to. By Monday, Sept. 11, many of the business news channels were talking about the lack of leadership in handling the crisis, as it was announced that Dunn was stepping down. George Keyworth, one of the targets of the pretexting probe, also is stepping down.
This review of personal telephone records, using what some would call hacking approaches and social engineering, could be viewed at worst as illegal, and at least very questionable from an ethics and integrity perspective. According to one report, the California Attorney General is looking at it as a crime and is trying to determine who to charge. Indictments are coming.
Appearing on CNBC, former Clinton advisor Lanny Davis, said this was Crisis Management 101, and he said HP missed the boat. He went on to say that the worst examples used in crisis management courses was the Exxon Tanker Valdez (the classic case), and then the debacle at ENRON replaced that. He believes the subversive surveillance at HP ranks right up there in terms of blundering while handling a crisis. He noted, “You should go to the Press and completely discuss it.” In other words, you do it yourself and not through any third-party intermediary.
On another CNBC show, Larry Kudlow doesn’t see the illegality of it. Some of his guests really chastised him for not seeing it for what it is, but maybe some people have been too desensitized to what an illegal act is. He said the stock went up. Well “Lar,” that’s because people see the company as getting rid of bad leadership. My advice to Larry is “Wake up and smell the subpoenas.” They will be coming soon as they should be. Get a clue.
One board member resigned back in May in protest of the subversive practice when he found out about it. Tom Perkins, who has a long-time history with HP that includes knowing the two founders, Hewlett and Packard, resigned from the board.
According to the Newsweek article, HP did not fully disclose on their quarterly Form 8-K Report to the Securities and Exchange Commission, the reason that Perkins resigned. By the way, he was not the source of the leak. That person was still on the board.
What happened to security at the phone company?
What is amazing is that the security surrounding people’s private information seems to be compromised.
Evidently, pretexting can be a surefire way to help facilitate identity theft and provide a comprehensive review of one’s phone records, bank records, and anything else that is electronically linked with Social Security numbers and addresses of individuals.
It is reminiscent of the infamous Kevin Mitnick’s “social engineering” approach, where you pretend to be someone else in order to obtain some sensitive or privileged information. You call up the source and convince the person on the other end of the line to provide more information from their data base, which then leads to putting enough of the puzzle together to find out other sensitive information that could range from passwords to personal information to, in this case, personal phone records as to who and when directors called people.
What is surprising is that it was relatively easy for the surveillance team to obtain the information. What happened to all the security and safeguards the phone company used to have with critical and proprietary information?
Blame should be put in right place
This shows another link between technology and compliance because you have an example of corporate governance being compromised
HP owes a full explanation as well as an objective investigation to its shareholders, its employees, and to everyone else in the business world that used to think that HP products were the gold-standard. Some of the “comments by the common man” found on one of the news sites’ comments list: http://news.com.com/5208-1014-0.html?forumID=1&threadID=20968&messageID=181933&start=-159
The acts conducted by the investigative company at the direction of Patricia Dunn have caused unprecedented embarrassment to the company. Ultimate, she initiated the investigation and should be accountable for all actions taken under the investigation.
I feel bad for the employees of HP and their new super-star CEO, Mark Hurd, who have been working so hard to rekindle its success.
This board always has been volatile with arguments with the Hewlett family members over the Compaq acquisition to the current debacle. I think it just may need a clean sweep, so shareholders call for a vote!
This level of sleaze is all too common at the top levels of our businesses. I can remember when HP was a very well respected company, and I bought their instrumentation products without question. Now their products are not reliable and their management is sleazy. http://news.com.com/5208-1014-0.html?forumID=1&threadID=20968&messageID=182212&start=-159
A board member who resigns because of principles is the right definition of “corporate governance.” It means someone who will not tolerate unethical behavior so that he/she can keep the perks of a board membership.
Here is one that is more focused: http://news.com.com/5208-1014-0.html?forumID=1&threadID=20968&messageID=181947&start=-159
The buck stops with you, Ms. Dunn. Get out. You wouldn’t accept ignorance as an excuse from anyone who works there. Why should we accept it from you?
Carly Fiorina was bad enough, but this is worse.
Unlike some TV pundits and respondents on various news comment lists, I don’t think this is a black-eye on HP, the corporation. It has a rich history of great people, great leadership in its founders, great products and a great work ethic. This is an indictment of a few people who reached a higher level in their career than they ever should have.
In this country, what we have is not a lack of hard-working people, creative people, nor dedicated people at all levels. You can find many such people who still are looking for a job that utilizes their full potential, yet underemployment is seldom talked about.
What we do have is a lack of true leaders, and it shows by magnificent blunders like this. Don’t tarnish the name of a good corporation. Tarnish the names of the pseudo-executives that should have never risen to the rank they did, and if anything, blame those that made the unwise decision to put them there. And don’t reward any of them for their lack of integrity with a multi-million dollar buyout or a golden parachute.
Dunn should step down immediately and not be bestowed with any going-away bonus the size of a Powerball Lottery pay out.
Let’s also hope that the executive search firms do not recycle this CEO into another decision-maker position to tarnish another company’s good name and reputation.
Carlini-ism: You lead by example. When did so many executives forget this?
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