Patricia Dunn is to step down as chairman of Hewlett-Packard following allegations the computer company employed an investigator who improperly obtained private phone records to root out boardroom leaks.
The Times reported this morning that the HP investigation widened yesterday as the US Department of Justice launched its own inquiry into allegations that private detectives hired by HP used improper surveillance techniques to find out who among the board was giving secret information to the press.
Ms Dunn, who had come under intense pressure to resign in the wake of the expanded investigation, will be succeeded by Mark Hurd, who will retain his existing positions as chief executive and president. Ms Dunn will remain as a director.
HP’s ten-member board has been locked in a series of meeting this week to decide the fate of Ms Dunn who faced calls for her resignation from a number of fronts over her handling of the affair.
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The board met on Sunday by telephone conference, and a split between Ms Dunn’s supporters and detractors emerged. No decision was made then about her future.
As yesterday’s meeting took place, there was a growing belief among Wall Street analysts that Ms Dunn could not let a question mark hang over her for too long because it could distract the company from its day-to-day operations.
Investors, however, had appeared not to have withdrawn their support for the HP chairman with the company’s shares holding steady ahead of yesterday’s meeting. After news of her departure broke today, the stock fell 0.4 per cent at $36.21.
The latest boardroom troubles at HP began in May, when the company revealed the results of a long-running investigation to determine who had been leaking sensitive company information early last year, about the time that Carly Fiorina was forced to resign as chief executive.
The investigation pointed the finger at George Keyworth, a longtime director, whom the board asked to resign. He refused, saying that he served at the pleasure of shareholders.
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But Thomas Perkins, another HP director and a powerful Silicon Valley venture capitalist, resigned in protest when it was discovered that his phone records, and those of other members of the board, had been obtained without his permission by a firm of private detectives working for HP.
The detectives hired another consultancy that engaged in a practice known as pretexting, which involves pretending to be a customer of a phone company to obtain calling records.
The practice is not illegal in every state, but it is thought to contravene identity-theft laws in California.
Mr Keyworth, who is still on the HP board is understood to have led calls from within for Ms Dunn to resign. Ms Dunn has claimed to have had no idea that pretexting was used in the investigations. She had said she would resign if the board so requested.