Tuesday, September 26, 2006

SF Gate
HP panel subpoenas execs, investigator
House Energy and Commerce Committee's hearing is scheduled to begin on Thursday in Washington

- Benjamin Pimentel, Chronicle Staff Writer
Tuesday, September 26, 2006

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A congressional panel that's scheduled to question Hewlett-Packard Co. Chief Executive Officer Mark Hurd and former Chairwoman Patricia Dunn this week has subpoenaed two other HP executives and a private investigator involved in the company's probe of leaks to journalists.

The House Energy and Commerce Committee subpoenaed HP senior counsel Kevin Hunsaker and global security manager Anthony Gentilucci to appear in Washington on Thursday.

Ron DeLia of Security Outsourcing Solutions, the agency hired by the company to investigate leaks of confidential information to journalists, was also compelled by the subcommittee to appear.

The subpoenas underscore the seriousness of the congressional hearings where Hurd is expected to face tough questions on his role in the controversial probe. The legally binding invitations also make it likely that at least two witnesses who may not be entirely sympathetic to HP will appear.

Gentilucci and Hunsaker are the two in question. HP spokesman Ryan Donovan said Gentilucci has resigned voluntarily effective today. As for Hunsaker, Donovan declined to comment but a source close to the situation told The Chronicle last week that the executive also was on his way out.

"HP has encouraged them to cooperate" with the congressional panel, Donovan said, confirming the subpoenas.

DeLia had been invited to appear voluntarily, but he had apparently refused. He could not be reached for comment Monday.

But last week, HP pointed the finger at DeLia's firm, which is based in Boston, as the agency that used the questionable, and potentially illegal, methods in the probe of journalists and company directors and employees. Mike Holston, an attorney with Morgan Lewis, which has been hired by HP to investigate the company probe, said last week that Security Outsourcing Solutions used false identities to obtain personal phone records in the probe.

"I want to stress that to the best of our knowledge, this activity was conducted by an outside investigator," Holston said a press conference at HP's headquarters in Palo Alto.

However, Holston said, Gentilucci provided an HP employee's Social Security number to Security Outsourcing Solutions, which apparently used the information to obtain phone records.

Two members of HP's media relations team, Michael Moeller and Brigida Bergkamp, were targets of company investigators.

Hunsaker directed the HP investigation, conducted early this year, called Kona II.

HP has been hurt by revelations that Hurd and Dunn were more deeply involved in the probe than earlier reported.

Dunn stepped down last week as chairwoman and director, and was replaced by Hurd, who has taken on dual roles. Dunn had been scheduled to relinquish the chair position to him in January and stay on as director.

But new revelations last week prompted the change. A source told The Chronicle that the board asked her to step down.

Analysts said Hurd's credibility has also suffered, as shown by the 5 percent drop in HP shares last week.

HP shares gained 60 cents, or 1.71 percent, to close at $35.71 in Monday's regular trading.

Still, some analysts are optimistic that HP will be able to weather the crisis.

Analyst Andrew Neff of Bear Stearns wrote, "There clearly could be more embarrassing/unsettling disclosures to come."

But he added: "Barring disclosure of a 'smoking gun' tying CEO Mark Hurd to indictable activities, our sense is that (HP) is taking the right steps to get control of the leak scandal, conveying a strong sense of urgency."

Richard Farmer of Merrill Lynch said the investigation even "creates a buying opportunity" for investors interested in HP.

"Given what we know today, we believe little of the boardroom scandal ultimately will impact the intrinsic value of HP," he wrote. "We believe Mark Hurd's statements, combined with our past impressions of his integrity, as well as HP's confidence in appointing him as chairman, make the risk of his departure remote."