Business Ethics and Governance Issues at HP: The Pretexting Controversy
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
At the end of June 2006, Perkins asked HP's external counsel Sonsini to examine the legalities of the investigative methods used to obtain the information. Sonsini replied that the information was obtained through pretexting. In July 2006, Perkins asked Sonsini and Hurd to change the minutes of the board meeting on May 18, 2006, to include the fact that he had resigned from the board in protest against the methods used in the investigation. This called for filing of a new form with SEC. In a subsequent letter to the board, he wrote about the illegal practices used by HP...
The Road Ahead
The legal charges against HP and the payment made by the company to settle civil claims did not seem to have any adverse affect on the stock price of HP, which hit a 52-week high of US$ 41.7 on December 27, 2006. According to an industry analyst, Charles King, "There seems to be a fundamental disconnect between the severity of the charges for the people who have been indicted and what the (financial) market thinks about this, the market seems to be shrugging off all this stuff." Analysts opined that Hurd's position had not been affected by the scandal...
Exhibit I: The HP Way
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