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The Honolulu Advertiser
Posted on: Wednesday, September 20, 2006

HP execs agree to testify at hearing despite legal risks

By Marcy Gordon
Associated Press

WASHINGTON — As new revelations about Hewlett-Packard Co.'s director spying scandal cascade, Chairwoman Patricia Dunn and the company's general counsel have agreed to testify next week before a House panel investigating the affair.

With federal and California prosecutors conducting criminal investigations of HP's use of deceptive tactics to find a boardroom leaker, some experts say the executives' testimony to Congress could be fraught with legal peril.

On the other hand, the risks of invoking their Fifth Amendment privilege against self-incrimination — as a parade of corporate executives have done on Capitol Hill in recent years — could be even greater, according to others.

Dunn, who authorized the leak investigation and has agreed to cede the chairmanship to the company's chief executive in January, and General Counsel Ann Baskins will testify at the hearing next Thursday by the House Energy and Commerce Committee, according to HP spokesman Ryan Donovan and committee spokesman Terry Lane.

In addition, Hewlett-Packard's outside lawyer, Larry Sonsini, who had defended the pretexting tactics as "not generally unlawful," has agreed to testify at next week's hearing, panel spokesman Lane said yesterday. Ronald DeLia, the private investigator who runs Security Outsourcing Solutions, a firm hired by HP, is expected to appear but may invoke his Fifth Amendment right and refuse to answer questions, Lane said.

In appearing before the panel, the two executives of Silicon Valley's largest and oldest technology company will be stepping into the highly charged and well-choreographed theater that is a congressional hearing. Enduring hours of questioning, business executives often sit at witness tables as they are vilified by lawmakers before television cameras.

Many such hearings, quickly convened amid unfolding scandals, "are about scoring political points, about making news," said Michael N. Levy, a former federal prosecutor.

They afford lawmakers an occasion to take strong stands on issues that resonate with the public, Levy noted. In this case, the issue is privacy. The Hewlett-Packard affair concerns the use by the company's investigators of a practice known as "pretexting" to obtain the private phone records of several directors and at least 12 other people, including journalists. To execute the ruse, the investigators impersonated the targeted individuals, using parts of their Social Security numbers to dupe telephone companies into turning over their calling records.

"It's certainly very dicey" for Dunn and Baskins to answer lawmakers' questions amid ongoing criminal investigations, said Michael Himmel, also an ex-Justice Department prosecutor now in private practice, at Lowenstein Sandler in New York.

In his extensive work defending officers and directors of public companies, Himmel says, he has never counseled them to testify at congressional hearings.

"You're talking high-stakes poker because the downside is losing one's liberty," he said.

For Levy, the question to weigh in deciding whether an executive should testify is balancing the risks of the "unknown" — what could surface in the authorities' investigations — against the risks of taking the Fifth Amendment.

In Dunn's case, he said, the spectacle of the company's chairwoman pleading the constitutional privilege before Congress could pose substantial risks. "It may have a major impact on the share price" and could make it difficult for her to remain in the position now, he said.

Jill Fisch, a professor of securities law at Fordham University who was a trial attorney in the Justice Department, cited "the bad PR signal that it would send for them to take the Fifth."

"It really could send a bad message to all of the people who deal with Hewlett-Packard," she said. At the same time, it is possible that Dunn and Baskins "don't believe they have criminal exposure," Fisch said.

The Palo Alto, Calif.-based company already has apologized for the intrusion into private phone records, although Dunn has insisted she had no idea that investigators were going to such extremes. The investigation relied on at least two outside firms, Security Outsourcing Solutions Inc. of Needham, Mass., and Action Research Group of Melbourne, Fla.

On Monday, HP delivered to the committee documents it had requested.

The Energy and Commerce panel's oversight subcommittee said yesterday that it also had sent invitations to testify at the hearing to Anthony Gentilucci, HP's global security manager, and Joe Depante, owner of Action Research.