This HP Board Scandal Makes You Wonder If Anyone Can Be Trusted Anymore
First, let me say the practice of posing as someone else (otherwise known as pretexting) to obtain that individual's private phone records is flat-out morally wrong, if not illegal.
It's a practice journalists do not subscribe to (at least the honest ones), and it's something that should carry stiff penalties. But rather than debate the pretexting issue, it seems to me you have to go way back and ask yourself why HP's chairman felt it was necessary to launch an investigation into the apparent leak of confidential information by a board member.
Anyone reading the ongoing coverage of this widening scandal last week has to be fascinated by the intrigue. While only time will tell if HP's chairman and its internal and outside legal team went too far in trying to determine whether board member George Keyworth was the source of the alleged leaks, you have to ask yourself how things even got to that point.
It seems to me that when you sign up for the lucrative monetary package that comes along with a seat on the board of the largest high-tech company in the world, it comes along with an obligation to be trusted. If the board of directors of a public company has no confidence that discussions it holds behind closed doors will not remain private, then its ability to operate effectively is dramatically compromised.
The inability to speak frankly or openly and debate serious issues at the board level because of the fear that the information might be leaked to advance someone's personal agenda can paralyze the decision-making process. That can't be good for the company or its shareholders, and it's on behalf of the shareholders that the board members are supposed to act. By the way, that's not to say that it would never be in the best interest of shareholders to leak information.
What is so sexy about this whole thing is not only the public exposure of an apparent boardroom disagreement that goes all the way back to Carly Fiorina's tenure, but the fact that it includes some of the biggest names in Silicon Valley, among them venture capitalist Tom Perkins and the most famous lawyer in Silicon Valley, Larry Sonsini.
I don't see how anyone can fault the desire on the part of the company to determine the source of the leaks. What we may eventually be able to find fault with is the manner in which HP went about that investigation—a series of events that apparently included contracting a third party, which in turn obtained personal phone records of both board members and members of the press without the individuals' prior knowledge.
There are a lot of things about corporate governance that are still broken in this country four years after the passage of the Sarbanes-Oxley Act.
One of those things is how companies assemble their boards of directors. Is there any question that it's a club and a collection of agreements whereby you sit on my board and I'll sit on yours? The entire election process for boards is a joke. The fact that the only names that are ever put before shareholders to vote on are those that are picked by the company speaks to this farce.
Over the next few months, there certainly will be some fallout from this whole matter, and that could include HP Chairman Patricia Dunn. But in the end, it will blow over, and there is very little that is likely to change in the way boards are constructed—and that is really what we need.
Make something happen. I can be reached at (781) 839-1202 or via e-mail at [email protected].