Sun, Sep 10, 2006 page11

• HP chairwoman fights for survival

  JOB ON THE LINE Patricia Dunn faces the board of the computer giant today to explain why she shouldn't be fired over the scandal involving alleged illegal snooping

  • NY TIMES SERVICE
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  Patricia Dunn, Hewlett-Packard Co's chairwoman, was known as a remarkable saleswoman as she rose to the top of the financial industry.

  But today, she will have to sell her board on the idea that she should not be dumped as the scapegoat for the scandal rocking the company. While the agenda item is how the company handled an investigation of its own directors -- and the possibly illegal techniques used to obtain their private phone records -- the underlying theme is whether she should remain.

  speaking out

  Dunn declined repeated requests for interviews until Friday. In a telephone interview, she moved to address some of the questions raised in the furor, defending her efforts to stop news leaks from the company's boardroom while conceding that the methods had been "sloppy."

  Emphasizing that her actions had been taken with the board's knowledge and approval, she said: "The chairman is not a unilateral power position. I am a servant to the board."

  While acknowledging calls from outside the company for her resignation, she said the criticism was unfair. "I fully intend to remain in these positions unless asked to vacate them by the board," she said. "If they do ask me, I will step down."

  But she is not lobbying or polling members.

  "This is not a job I asked for or a job that I particularly wanted," she said.

  Dunn, the former head of Barclays Global Investors, joined the Hewlett-Packard board in 1998 and took over as chairwoman after the ouster of Carly Fiorina as chairwoman and chief executive early last year. Fiorina's removal, after a contentious proxy fight over HP's merger with Compaq Computer, supposedly marked the end of a fitful period for the board.

  But while the business rebounded, boardroom tensions persisted, fueled by news leaks from within. The company ultimately hired private investigators to identify directors disclosing information to the media and those investigators posed as board members -- a practice known as pretexting -- to gain access to their personal phone records.

  The revelations emerged this week, set in motion by a former board member and pre-eminent Silicon Valley venture capitalist, Thomas Perkins, who resigned in anger over the investigation in May and then pressed the company to acknowledge his reasons for leaving.

  bad blood

  Dunn said on Friday that she felt that a personal dispute was at the center of the storm.

  "Tom is a powerful man with friends in powerful places," she said. "This brouhaha is the result of his anger toward me. He is winning the PR war."

  "He was the most hawkish member of the board for finding the leaker," she added.

  "He wanted us to bring in lie detectors," she said.

  She said that Perkins was initially upset with her because she revealed the name of the leaker to the full board rather than handle it quietly in private.

  "He wanted me to handle this behind closed doors, without even revealing the name of the leaker," she said. "I could never agree to that."

  Perkins could not be reached for comment on Friday, but his lawyer, Viet Dinh, a Georgetown University law professor, said, "When red flags go up, that's when boards should ask questions."

  Dunn said the company investigated 10 leaks and that evidence in seven of them pointed to George Keyworth II, who was asked to resign at a board meeting in May. He refused, but the company said this week that it would not nominate him for re-election. Dunn said they never determined the source of the three other leaks.

  "Our board is happy to know that the leaker is caught," she said. She said the leaks had been "long-term, persistent and intractable" with potential for ruining trust among board members. She termed the attempt to stop the leaks a "noble cause."

  She said that no one on the board "endorsed, understood or approved" of pretexting and that the company was putting new guidelines in place to prevent such practices in future investigations.

  "It wasn't implemented well," she said. "But I had no choice but to follow this violation. It fell to me to do it."
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