HP's Patricia Dunn...Felon? UPDATED

Sorry for the digression, but it's a slow Internet news day, and something feels wrong here.  Before I describe what, however, I need to discuss what is not wrong.

It is not wrong that former HP Chairman Patricia Dunn was publicly ridiculed for ordering and overseeing a cloak-and-dagger investigation of boardroom leaks.  It is not wrong that Dunn (finally) resigned over this (she should have taken responsibility and resigned immediately, whether or not she knew about the "pretexting").  It is not wrong that HP board members like Thomas Perkins would be outraged about the investigation and quit the board in protest.  It is not wrong that everyone thinks pretexting (a.k.a., fraud) is unethical--it obviously is.  It is not wrong that everyone thinks Dunn made a bad business decision--she did.  It is not wrong that HP has been globally shamed for engaging in such a practice--it should have been.

What feels wrong is that Patricia Dunn has been charged with four felonies.  Unless the California attorney general knows something that the rest of us don't (possible), Dunn neither intended to commit a crime nor knew one was being committed.  On the contrary, she took repeated steps to assure herself that the investigation was legal.  She sought and received assurances from, among others, HP's general counsel, Ann Baskins--a legal expert far better qualified to know (and who, for some reason, has not been charged with the same crimes).  Baskins reportedly concluded and still believes that the investigation was legal.  Wilson Sonsini, HP's outside law firm, concluded and still believes that the investigation was legal.  As do other legal experts. 

So what more could Patricia Dunn have done?  Used her own legal spidey sense to say, "Hey, my lawyers tell me it's fine, but I think they're wrong"?  Again, the issue here is not whether the investigation was smart or ethical--it wasn't--but whether it was criminal.  And it seems a more-than-fair defense for Dunn to say, "I consulted legal experts--not hacks, mind you, lawyers at the top of their field--and they assured me it was legal."  Dunn will have an opportunity to make this defense, of course, but she will have to do it in court, after sacrificing her board seats, reputation, more than a year of her life, and tens of millions of dollars in legal fees.  And given that hindsight is always 20/20 and juries aren't omniscient, she might still go to jail.

Meanwhile, the person who allegedly put some of these events in motion, an alleged leaker, Dr. George Keyworth, has been portrayed as a helpless victim, worthy of sympathy.  Keyworth has every right to outraged that his employer defrauded the telephone company to get his phone records.  He does not, however, deserve to feel holier-than-thou about his own conduct in the affair. 

On the contrary, if Dr Keyworth did, in fact, chat secretly with reporters about ongoing board discussions, he betrayed HP, HP's shareholders, and the rest of the board.  He violated his professional duty, and then (by not resigning when called on it), refused to take responsibility for his actions.  Keyworth's defenders point out that he "had HP's interests in mind."  Maybe, but secretly dishing to reporters about inner workings of board discussions was just what the board was trying to prevent, and, if he did it, he betrayed the company by doing it. 

[UPDATE: Since publishing the initial version of this post, I have received polite notes from a Dr. Keyworth supporter who argues that there is no evidence that he leaked "confidential information" or that he did this "repeatedly", as I suggested in the initial post.  This supporter also points out that despite the pretexting, etc., the investigative report of the leaks was "inconclusive."  I still think sharing details about a board retreat, ongoing board decisions, etc., in the context of a explicit board-wide consternation about press leaks--which I think Dr. Keyworth has acknowledged doing on at least one occasion--constitutes a breach of trust, but I don't know all the facts.]

Was Keyworth's alleged behavior a crime?  Of course not--just as what Patricia Dunn personally did to try to stop it doesn't sound like a crime.  But it was unprofessional and a betrayal of responsibility and trust.  So hold off on the Keyworth hagiographies, at least as far as his conduct in this affair is concerned.

The HP scandal is major embarrassment, one that deserved to lead to firings, resignations, regret, apologies, and bad publicity.  Based on the facts that have been released to date, however, it does not deserve to lead to jail time or a criminal indictment, at least for Patricia Dunn.

UPDATE

A couple of smart readers have observed that 1) ignorance of the law is not a defense, and 2) Dunn's changing stories and refusal to take responsibility undermine her defense. 

On point two, I am taking Dunn at her word in her Congressional testimony--which, as I recall, was that she didn't know the investigators were "pretending to be someone else" and that HP's corporate counsel, Ann Baskins, who did know, had pronounced the investigation legal.  If either of these assertions is false, then the picture changes.

On point one, I agree that ignorance of the law is no defense when the law is clearly defined and when the accused knows that someone is violating it.  In this case, although there should have been a law against pretexting, many legal experts think that there wasn't.  More importantly, Dunn claims that she didn't know that the investigators were engaging in pretexting, so that even if it was against the law, she says she was unaware of it. 

In other words, there is an important difference between ignorance of the law and ignorance that the law was being broken.  The latter isn't a defense, either, if the person should have known.  But if the person takes reasonable steps to assure themselves that a law is not being broken, I think this should be a viable defense.  If it isn't, then every person who manages employees who commits crimes will be liable for those crimes--a situation that would deter most sane people from ever becoming managers.

Comments

[King Troll]

FIRST BITCHES. I CANT LOSE!!! I should be called UNSTOPPABLE TROLL!

[ZF]

I think the California AG is kind of trapped by the political reality here.

Dunn may be as clean as you say, but she has been very slippery in some of the things she has said. The whole thing looks ex-post like a confederacy of dunces, but if, by the time it gets to court and all the stories have changed, the AG were to discover he had indicted the wrong people then he would look like the biggest dunce of all. Hence the catch-all indictments.

Like every aspect of this sorry saga, Dunn has brought this on herself.

[Kevin Murphy]

Since when was ignorance of the law a defense against criminal liability?

[GES]

For me the most telling thing about Dunn's culpability is her behavior on May 18. By this date she knew that pretexting had been used (told at least in March) and she had the report in her hand which contained obviously confidential personal data. So what did she do? As an ethical corporate governess did she refuse to use such information for any cause, no matter how just that cause may be? No, she marched into the room waving the report (I imagine a gleam in her eye, but that is speculation), pointing at Mr. Keyworth and gleefully announcing gotcha! Even as Mr. Perkins leapt to his feet in outrage, Ms. Dunn was doing her happy dance and chanting “gotcha” (if only on the inside).

There is a tradition in the free world that evidence improperly obtained must never be used in a prosecution; it is in this way that the improper gathering of evidence can be discouraged. Was Mr. Keyworth guilty? Yes, he freely admitted as much. Should he have been forced to resign based solely upon improperly gather evidence? Never.

Since that day Ms. Dunn has compounded her errors in judgment by insisting that while she wielded the authority to call and oversee such an investigation (and take full credit for finding the leak; if only for a moment), she denies that she simultaneously held responsibility for the investigation. Ms. Dunn seems to forget that the responsibility came inseparably attached to the authority; she will never be able to separate the two, and her continuing attempts to do so is disrespectful to all of us who respected her in the past.

[David]

I find this evil bitch typical of females in power who think they own the world. I hope she does some real jail time. Obviously she will pander the breast shot.I hope Chemo is painful. She has sullied the name of a fine and good corp with her evil self oriented doings.
She still thinks she is a Female God sent to destroy right.

[Victor]

Not at all germane, but I thought this interesting:
http://www.forbes.com/business/2006/10/05/google-advertising-zeitgeist-tech-cz_qh_1005google.html

these guys are thinking pretty damn big.

[Joe]

"On point one, I agree that ignorance of the law is no defense when the law that someone is accused of breaking is clearly defined and when the accused knows it is being violated."

Laws are rarely clearly defined. It's not a 1's and 0's kind of things. That's why you have judges and juries - to interpret the law. And, here's the kicker, that interpretation can change over time or location. A jury in 1965 Alabama might interpret a law differently than a 1990 California jury -- even if the law had the exact same wording. The jury in this case will decide a) if the law existed and b) if it was broken. Simple.

Second point. It is not necessary for the accused to know that a law is being violated. Again, very simply, it's just not necessary for a conviction. Whether a convicted person knew the law was being violated or intended to break it comes into play only during sentencing. It does not come into play at the "guilty/not-guilty" part. In this case, Dunn's attempts will likely help her during sentencing.

I agree that, based on what I have read, Dunn is not a felon here. And should I be to be on the jury and interpret the law against her specific case then that is likely what I will say. But, until she has her day in court and the prosecutor has his day, all we can say, without any argument because it is a fact, is that she is "accused".

[Henry Blodget]

Joe... Agreed on the open-to-interpretation, although, in this case, the law seems especially vague. On the "knew/didn't know", I still think there's a difference between not knowing that YOU are breaking a law and not knowing that SOMEONE WHO WORKS FOR YOU is breaking a law. Assuming reasonable diligence, I don't see how senior managers can be criminally liable for laws broken by subordinates who have been ordered not to break laws. Professionally liable, yes. Criminally liable, no. Otherwise, every time a company broke a law, the CEO would be criminally liable--and you would have fewer smart people volunteering to be CEOs.

[Dana]

Keyworth was found to be the leaker, but no one that I've seen is really defending him or even portraying him as an innocent victim. It is the other board members and journalists that are the victims here.

[Still Inside]

Like Martha Stewart before her, Dunn is showing us just how boring an AG's job must be these days.

Even if she's red-handed guilty on this, even if she made the calls HERSELF, dug through his garbage, pretended to be his wife and fucked him, this is not any of our business and the crimes here amount to a parking ticket.

Here's the acid test: if this happened at a small public company that nobody has ever heard of but whose stock recently got crushed (i.e. there was real damage to real people [but not necessarily related to the "scandal"]), does anybody honestly believe there'd be a case here in any of the 50 states? Of course not.

What if the victim in the case was a relatively poor and defenseless worker-bee whistle-blower employee, and not a billionaire like TP whose sum total of emotional damage may have consisted of throwing a tantrum on the foredeck of his 250' yacht? Nope, can't make headlines with that kind of case...

SI

[Peter]

Once she saw personal information and then used it, she was guilty. In this day with HR and other privacy laws a senior manager must know better or find another job.

[Dave Ryan]

As a 24 year HP vet, and 5 year retiree, I have been totally disgusted with the current HP scandal. I could not agree more with Blodget's comments. And, I thought I would go retrieve one of the 3 items I saved when I left.
They were Packard's Book on the HP-Way, Birnbaums/HP's book on Risc, and a 1989 copy of the HP-Way, which was published then for the specific purpose of Communicating it throughout the company, which prior to that was done primarily through verbal discussion.

Right in the middle of first item...Organizational Value, and right behind trust, respect for individual, and high level achievement is::::: "We conduct our business with UNCOMPROMISING INTEGRITY"

All managers in particular were responsible for understanding this and making certain employees got the message. How it is possible for HP board members, and other executive management to think that these values are unimportant today in business is beyond belief. Perhaps now is the time for the company to dust off some old copies, or actually put the words into practise. It ought to be mandatory memorization for future board members.

And Keyworth? What was he thinking? As far as I am concerned he caused the whole thing...leaking to the press....irresponsible period.

And just at a time when everyone at HP is doing a great job and Mark Hurd is getting the company running on all cylinders again...what a distraction.

Dave
on the central coast

[Bin Gu]

I initially gave Pattie the benefit of doubt. But after carefully following the event, she has lost her credibility. She claims to be a corporate governance expert. But what she did illustrates her true skin:

1) she single-handedly organized the campaign without close involvement of other board members. Do we really believe a corporate governance expert would do that without clear authorization and appointment from the board? What process did she go through to appoint herself as the chief prosecutor in the board?

2) she chaired the board meeting to fire Carly Fiorina (I am not a fan of Carly either ...) without being a chair of any board committes. Do we really believe a corproate governance expert would put herself in charge of such a meeting without going through a process to legitimize her role?

3) Tom was the chair of the corporate governance committee but Pattie bypassed him in her investigation to strengthen the "corporate governance". Do we really believe a corproate governance expert would bypass the corporate governance committee to launch an investigation on corporate governance? Even if she believes Tom is biased, a good governance expert would go through the full board to ask Tom to recuse himself from this investigation rather than bypassing the committee.

In the end, the investigation has revealed plenty of evidences that Pattie is not what she said who she is. She is no a governance expert, but a politician only interested in using corporate governance as a tool to advance herself at any cost. I am glad that HP has finally got rid of her.

Now back to the question whether she is felon or not. The answer is in fact quite clear. In the end, this case would be her words against other witnesses' words. Given the evidence, I would argue that she has no credibility in what she says and therefore the jury should convict the woman.

I have no double that she is a felon, but take no pleasure in saying so. It is a sad story but happens so often especially for people coming from difficult family background. Their drive to success and power at any cost brings them wealth and fame but also serves as their undoing - a typical Greek tragedy.

[Megan]

HB - I applaud your article (which I read in Forbes first). She is not a felon. Did anyone who was "pretexted" suffer? Did Dawn suffer emotional distress? Did Keyworth? Clearly not since he even resisted resigning when HIS crime was made clear - and yes it should be criminal to leak board information when that is the very information you have sworn to protect! As for the legality, our very congress is struggling with this issue and can't even get a bill to the floor for a vote on the legality (or not) of pretexting. Although CA has a law that will go into effect Jan 1, today, it is not a crime in this state - period.
Despite this lapse in judgement (and it's a big one), Patty Dunn has been a powerful (good) force in silicon valley for years. She was not inducted into the SV hall of fame for nothing (just an ironic 2 weeks ago). Let's get serious. It's mid-term election time. Every politician wants his/her name in the news. Lockyer (a name most can't pronounce or remember) wants his time in the light - and he's getting it at the expense of people who have worked very hard to make HP and CA a financial success. If anyone should be velified in this case is should be Keyworth and Perkins.

[walt]

Quite a sad day for the concept of law and justice when prosecutors throughout the land are using their office for political pandering, social engineering, and extortion; all outside the frameworked intention of the law.
Think not?
Boulder County- John Karr.
Santa Rosa County - John Karr.
How about the Duke Rape case?
Dick Grasso supposedly was paid too much - prosecute him!
Martha Stewart - never even charged with insider trading!
Childcare abuse hysteria prosecutions in 1980's of which most all of the found guilty were later exonerated!

[Joseph Hunkins]

An excellent post. Generally the complexity and the fact that all law involves subjective decisions makes it *impossible* for the players, even the legal expert players, to know where they stand.

Still, it may be best to nail people just to put the fear of god into them. Not fair, but functional?