HP faces federal investigation into snooping scandal

Hewlett-Packard is facing a federal investigation into whether the company broke the law when the computer manufacturer obtained directors' and journalists' phone records as part of its attempt to hunt down the source of boardroom leaks.

The attorney general in the company's home state of California has already signalled HP or its contractors could face criminal charges, but the company admitted yesterday the Department of Justice has also joined the widening investigation.

The revelation that federal investigators have approached the company came as its board convened for a second day to discuss the future of the chairman, Patricia Dunn, who oversaw the controversial leak inquiry.

The debacle has threatened to tear apart HP's board and has overshadowed a trading renaissance at the company under its recently installed chief executive, Mark Hurd.

Private detectives hired by HP impersonated at least two directors and nine journalists in order to obtain confidential phone records and to discover that George Keyworth, HP's longest-standing board member, had leaked details of boardroom discussions to the press.

Such impersonation - called "pretexting" by private eyes - is illegal in California.

HP said in a statement yesterday: "As reported on 6 September, we recently have been informally contacted by the attorney general of the State of California requesting information concerning the processes employed in an investigation into possible sources of leaks of HP confidential information.

In addition, since then, we have been informally contacted by the United States attorney's office for the northern district of California requesting information similar to that sought by the California attorney general.

We are cooperating fully with these inquiries."Tom Perkins, another long-standing board member, quit in anger in May when his friend Mr Keyworth was asked to resign.

Over the weekend, he called for Ms Dunn to stand down to restore boardroom harmony.

Ms Dunn insists neither she nor the rest of the board knew underhand tactics had been used, but has said she would resign if she lost the confidence of her fellow directors.

An emergency board meeting broke up on Sunday without resolution, but reconvened yesterday to discuss a plan for Ms Dunn and Mr Keyworth to step down, with Mr Hurd adding the chairmanship to his responsibilities as chief executive.

The roles of chairman and chief executive were split 18 months ago, when HP fired the previous incumbent, Carly Fiorina.

It was Ms Fiorina who first called for a leak inquiry after details of the board's dissatisfaction with her performance appeared in the Wall Street Journal, hastening her departure.

Ms Dunn, 53, had been instrumental in ousting Ms Fiorina.

- INDEPENDENT