Reference no: EM132217833

Questions: Dunn’s hired investigators used the method of pretexting to procure information. In terms of ethical duties, what duty (or obligation) could pretexting be perceived to violate? Why?

CASE: Hewlett-Packard, a leading manufacturer of computers, printers, and peripherals, takes privacy very seriously. The company proclaims that it “has set the bar high when it comes to privacy” and asserts, “We make privacy protection integral to our business operations.” This high regard for privacy was apparently cast aside in 2006 when HP’s chairwoman Patricia C. Dunn sought to discover the source of leaks to the press from the company’s own board of directors. In January and February of 2005, when the board was considering the future of then-CEO Carleton S. Fiorina, who was eventually ousted from her position, articles in the Wall Street Journal and the New York Times reported extensive details of confidential board deliberations. These unauthorized disclosures exacerbated the existing tensions among board members and led some directors to pressure chairwoman Dunn to find the source of the leaks. Later, in January 2006, a news article on the web-based CNET Networks on the strategic plan of HP under its new CEO, Mark V. Hurd, suggested that leaks were still coming from one or more board members. In Ms. Dunn’s view the leaks were doing great harm to the company and had to be stopped. Because she was a possible subject of suspicion, Ms. Dunn felt that she could not direct an investigation, and so she contracted with a Massachusetts-based firm named Security Outsourcing Solutions, which, in turn, hired a subcontractor, Action Research Group, based in Florida, to do much of the detective work. However, Ms. Dunn was kept apprised of some of the contractors’ operations. The investigators managed to obtain telephone records of several board members and journalists for the Wall Street Journal, New York Times, and CNET by posing as the individuals in question and requesting copies of their telephone bills, which contained lists of all calls made. This practice is known as “pretexting” because a pretext— a misrepresentation of the identity and purpose of the requester—is employed to obtain information. In all, the outside contractors analyzed 33 months of telephone calls involving 24 people under investigation and 590 of the people they contacted. In addition, some board members and journalists were put under active surveillance, and videos were examined for signs of meetings between directors and journalists. In at least one instance, an investigator, posing as an anonymous tipster, sent an e-mail message to a CNET reporter with a piece of Trojan software that was intended to send back information about any addresses to which the message was forwarded. This ruse apparently failed to work, though. HP also conducted a feasibility study for planting undercover agents in the San Francisco news bureaus of the Wall Street Journal and CNET in the guise of clerical workers or cleaning staff. There is no evidence, however, that the plan was ever implemented. The investigation succeeded in identifying the leaker. It was George A. Keyworth II, the longest-sitting HP board member, who had also served as director of the White House Office of Science and Technology Policy from 1981 to 1986 during the Reagan administration. When confronted in a board meeting on May 18, 2006, Mr. Keyworth was reported to have said, “I would have told you all about this. Why didn’t you just ask?” In his defense, he explained that he was “frequently asked by HP corporate communications officials to speak with reporters—both on the record and on background.” He said he often met with reporters to promote the company and denied ever divulging any confidential or damaging information. During the meeting, Keyworth was asked by a majority of the other directors to resign. He refused but later left voluntarily when Ms. Dunn agreed to step down as chair. Another director, Thomas J. Perkins, resigned to protest the way that Ms. Dunn had handled the matter. It was Mr. Perkin’s insistence that the reasons for his resignation be explained publicly that led to the disclosure of the investigation. In the ensuing uproar, the Securities and Exchange Commission and the U.S. House of Representatives requested information in order to determine whether any laws had been broken or any new regulations were needed. The California state attorney general launched a criminal inquiry in the belief that pretexting violated existing law. Although HP had obtained a legal opinion that pretexting was legal, the opinion of lawyers was divided. To date, Congress has not passed any legislation that explicitly outlaws the practice. Although the California legislature passed and the governor has signed a bill to forbid pretexting, the law did not take effect until January 1, 2007, after the HP investigation. To the end, Ms. Dunn refused to take responsibility for the investigation or admit that she had done anything wrong. Before a congressional House committee, she declared, “I do not accept personal responsibility for what happened.” Although she admitted that the investigation “wasn’t implemented well” and that “it looks like there was sloppy work along the way,” she still called it a “noble cause” and said that she had “no choice” but to respond to the leaks. In contrast, Mark Hurd, the CEO, stated, “I am taking action to ensure that inappropriate investigative techniques will not be employed again. They have no place at HP.”