News leaks seemed to plague Hewlett Packard. The first leaks surrounded the ouster of chairwoman and

News leaks seemed to plague Hewlett Packard. The first leaks
surrounded the ouster of chairwoman and chief executive Carly Fiorina. In the
midst of this internal turmoil, The Wall Street Journal published an article
with details of closed-door board discussions about the planned management
reorganization. An external legal counsel interviewed board members but did not
succeed in identifying the leak. Evidence of more leaks appeared a year later
as news organizations once again described the deliberations of closed-door
board and senior management meetings in extensive detail. It was clear
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News leaks seemed to plague Hewlett Packard. The first leaks
surrounded the ouster of chairwoman and chief executive Carly Fiorina. In the
midst of this internal turmoil, The Wall Street Journal published an article
with details of closed-door board discussions about the planned management
reorganization. An external legal counsel interviewed board members but did not
succeed in identifying the leak. Evidence of more leaks appeared a year later
as news organizations once again described the deliberations of closed-door
board and senior management meetings in extensive detail. It was clear that
someone from inside was leaking information. In addition to board members,
reporters from such publications as The New York Times, The Wall Street
Journal, Businessweek, and CNET became targets of the ensuing investigation
into ten different leaks. The methods used to try to plug these news leaks led
eventually to a board shake-up, which included the departure of nonexecutive
chairwoman Patricia Dunn. Fast forward to 2013, and another company, J. C.
Penney, was involved in a story about board leaks. J. C. Penney director and
activist investor William Ackman allegedly provided a news outlet information
about board meetings, detailing discussions about his frustration with the CEO
search process. In another example, the University of North Carolina Board of
Governors in 2014 removed a trustee when he allegedly leaked information about
candidates in the search for a new chancellor. Investigating board members is a
difficult proposition. Coming back to the HP example, the board could not
supervise what was essentially an investigation of themselves. Neither could
the employees handle the investigation because that would have put them in the
untenable position of investigating their own bosses. Left with few options, HP
board chairwoman Dunn turned the investigation over to a network of private investigators.
According to Dunn, she could not supervise the investigation because she was a
potential target. Dunn asked the head of corporate security to handle the
investigation, as this was the person who handled employee investigations, but
he still had conflicts of interest as an employeeof the board. So the company
outsourced the investigation to a network of outside investigators, telling
them to conduct it within the confines of the law. The primary source of the
leaks was uncovered, but questions remained about the process of the
investigations. Although no recording or eavesdropping occurred, investigators
had used a form of “pretexting” to elicit phone records. Pretexting is a way of
obtaining information by disguising one’s identify. In this case, investigators
used pretexting to obtain phone records of not only HP board members but also
reporters who covered the story. In addition, investigators followed board
members and journalists and watched their homes. They also planted false
messages with journalists in an effort to get them to reveal their sources
inadvertently through the tracking software included in the fake messages.

 1. Who should be responsible for taking action when a board
member engages in problematic behavior? If the chairperson is responsible, when
should he or she involve the whole board? What are the costs of early full
board involvement? What are the costs of late full board involvement?

2. One complaint lodged was that HP provided board members’
home phone numbers to investigators. Was this out of line? Do board members
have a responsibility to provide certain basic information, or was their
privacy breached when their home phone numbers were given? A board member whose
phone records proved he was not involved in any leaks still resigned the board
in protest that his privacy was invaded by the pretexting. Was he right?

3. The law regarding pretexting is unclear. While it is
illegal when used to obtain financial records, the use of pretexting in other
situations—such as the phone records in this example—was not necessarily
against the law. Should it be?

 4. How might things have evolved differently if the
ethicality rather than the legality of the practice had been the issue? Are the
two synonymous or is there a difference?

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