HP Officials Refuse to Answer Questions in Congressional Hearing

The saga of Hewlett-Packard Co.'s (HPQ) spying scandal — which has toppled the company's chairwoman, two other directors and at least two high-ranking executives — deepened in intrigue Thursday as lawmakers exploring the imbroglio summoned comparisons to Watergate and Enron.

Members of the House Energy and Commerce Committee demanded to know how investigators for the respected Silicon Valley anchor could use tawdry tactics such as "pretexting," or impersonating other people to obtain their phone records.

In one key document cited by the panel, an HP investigator had warned higher-ups, including the company's now-fired chief ethics officer, that the tactics being used to find the source of boardroom leaks were possibly illegal and at the very least could damage the company's reputation.

But at least in the initial round of Thursday's hearing, few answers emerged. Ten people involved in the cloak-and-dagger investigation — including the former ethics officer and General Counsel Ann Baskins, who resigned Thursday — asserted their Fifth Amendment right against self-incrimination, refusing to answer questions.

Former Chairwoman Patricia Dunn, who stepped aside last week as the scandal showed no signs of abating, told the panel that she had been assured that phone records had been obtained lawfully from public sources.

Dunn said the word "pretexting" never cropped up in the conversations.

"I deeply regret that so many people, including me, were let down by this reliance" on such advice, Dunn told the panel.

The panel was also due to hear from CEO Mark Hurd, who apologized for the investigatory tactics when he replaced Dunn as chair last week but has denied having direct knowledge of the probe's methods.

In testimony prepared for Thursday's hearing, Hurd said Dunn had told him of the existence of the investigation, "but I was not involved in the investigation itself."

"How did such an abuse of privacy occur in a company renowned for its commitment to privacy? It's an age-old story. The ends came to justify the means," his prepared testimony said.

Lawmakers opened the hearing by expressing outrage that HP's investigators masqueraded as HP directors, employees and as reporters to obtain their telephone records, surveilled them and their relatives, sifted through their garbage and used an e-mail sting to dupe one reporter.

"We have before us witnesses from Hewlett-Packard to discuss a plumbers operation that would make Richard Nixon blush were he still alive," Democratic Rep. John Dingell (news, bio, voting record) of Michigan said.

Other lawmakers said the scandal was reminiscent of the Enron Corp. debacle, in which top management claimed not to know of serious wrongdoing that ultimately brought the company down. The panel members said the comparison was especially disappointing for a company with the stature of HP, a 67-year-old computer and printer maker with a reputation for integrity.

"It's a sad day for this proud company," said Rep. Diana DeGette of Colorado, the panel's senior Democrat. "Something has really gone wrong at this institution."

Rep. Ed Whitfield, R-Ky., chairman of the committee's investigative panel, demanded to know why, with many high-ranking HP executives and attorneys involved in the probe, "No one had the good sense to say `Stop.'"

As lurid details of the affair emerged in recent weeks, the corporate casualties have mounted at HP, which ranked 11th on Fortune magazine's most recent tally of the nation's biggest companies. HP announced general counsel Baskins' resignation just ahead of the hearing.

Besides the inquiry by the House committee, federal and California prosecutors are investigating whether company insiders or outside investigators broke the law. California Attorney General Bill Lockyer has said he has enough evidence to indict HP insiders and contractors. And the Securities and Exchange Commission is pursuing a civil inquiry.

Larry Sonsini, HP's outside lawyer and one of Silicon Valley's most influential figures, also appeared at the hearing, urging Congress to clarify laws around pretexting. He had assured company executives of the legality of the spying probe.

The committee sought testimony from Ronald DeLia — the operator of the detective firm hired by HP — and two other key figures in the leak probe: Kevin T. Hunsaker, until recently the company's chief ethics officer, and Anthony R. Gentilucci, who managed HP's global investigations unit in Boston. They, along with outside investigators believed to have served as the foot soldiers in the company's efforts, took the Fifth.

HP shares have been largely unaffected during the probe; investors are most concerned about the fate of Hurd, who is credited with engineering a remarkable turnaround in the company's performance in his 18 months as CEO. The shares were up 24 cents at $35.63 on the New York Stock Exchange on Thursday afternoon.