Hewlett-Packard Pushes for Ouster of Board Member

Investigators for Hewlett-Packard Co. (HPQ) sought private telephone records of board members while hunting for leaks to the media of confidential company information, the computer maker said in a regulatory filing Wednesday.

The company also disclosed that outside lawyers it hired to review the matter could not determine if the probe "complied in all respects with applicable law." And it said the state attorney general in California is examining techniques used in the investigation. HP said it would cooperate with the state probe.

The company made the disclosures in a Securities and Exchange Commission filing notifying investors that its board will refuse to nominate one director, George A. Keyworth II, for re-election because it determined he was a source of the leaks.

HP said outside legal counsel met with the company's directors early last year to try to determine how details of board meetings were continuously being leaked to the media without company approval. The meetings did not reveal the source of the leaks and the leaks continued.

Further investigation revealed that Keyworth was the source of the information, the company said. Keyworth was asked to resign on May 18 but refused, the HP filing said. HP said it won't nominate Keyworth for another term on the board.

Another director, Thomas J. Perkins, abruptly left the company on May 18, citing personal frustration with chairman's handling of the matter, the filing states. The chairman is not named in the SEC document, but Patricia Dunn, 52, who has been on the board for eight years, was chairman at the time.

In June, Perkins requested information from HP regarding the probe and said he consulted legal counsel regarding concerns over phone and e-mail communication that may have been improperly recorded. HP said no recording or eavesdropping had occurred. But pretexting for phone records, a method used by investigators to gather information by disguising their identity, was used, according to the filing.

Perkins asked that an investigation into the techniques requested that HP conduct an inquiry into the propriety of the investigation.

A high-ranking HP committee then hired an outside counsel to look into the matter. The counsel advised the company that the use of pretexting at the time "was not generally unlawful" but couldn't confirm that the techniques employed by the private investigator were completely legal.

Based upon its investigation, Hewlett-Packard said its nominating and governance committee has recommended that controls relating to investigations be strengthened and that management should be in a position to assure that all aspects of company probes comply with applicable laws and HP's code of ethics.

SEC corporate finance staff also is currently looking into whether or not HP properly disclosed circumstances surrounding Perkins' departure. At the time of Perkins' resignation, the company didn't file a 502-b form with the SEC, which would have indicated Perkins' leaving was related to an internal disagreement.

Hewlett-Packard shares fell 50 cents, or 1.4 percent, to $35.95 in early trading Wednesday on the New York Stock Exchange.