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Published: Thursday, 9/28/2006

Paranoia at Hewlett-Packard

PARANOIA appears to have gotten the better of Hewlett-Packard. The computer giant's elaborate spy program to plug internal media leaks has become a full-blown scandal.

As new revelations continue to surface about the company-generated scheme to find a mole in the boardroom, one writer said HP looks more like a paranoid relic from the Watergate era than a high-tech innovator. By the time the covert operation was finally exposed, questions about shady tactics had multiplied.

In their zeal to root out who had been describing sensitive boardroom deliberations to the media, company detectives may have stepped on all sorts of privacy laws. By impersonating board members, employees, and journalists, they obtained scores of private phone records, personal data, Social Security numbers.

The detectives' subterfuge also played out in bogus electronic mail to reporters under the pretext of providing information to get information. Reportedly, some e-mails came with attached files with tracking capabilities.

The doubtful legality of the "pretexting" methods of the HP contractors has prompted investigations by state and federal authorities. California Attorney General Bill Lockyer says he already has enough evidence to indict people inside and outside the Palo Alto-based company.

The internal investigation at HP was so out of control there were allegedly even plans to infiltrate several news organizations posing as clerks or cleaning crews. In the meantime, the bizarre operation conducted extensive surveillance and even snooped on former HP CEO and Chairman Carly Fiorina, who launched the quest to identify media sources in the first place.

Through it all investors seemed initially to shrug off the emerging scandal. The difference is HP Chief Executive Officer Mark Hurd who, until now, had not been linked to the dubious tactics of the company investigators.

But after recovered e-mails indicated the rising HP star may have been far more involved in the boardroom investigation than previously thought, HP shares fell. And the dark cloud hanging over the company doesn't show any signs of dissipating soon.

Besides the ongoing criminal investigations to see if company executives broke any privacy laws, a congressional panel plans an upcoming hearing on the matter, including testimony from the now-resigned HP Chairman Patricia Dunn.

She authorized the pretexting probe but insists she was unaware of the extreme tactics employed. Still, the outlook for Hewlett-Packard management is pretty dicey, and that's not paranoia talking.

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