X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Judging by his perfectly upright posture and evident fear of making even the slightest movement — save for those darting eyes — it was clear that Charles Kelly wanted to be far away from Room 2123 in the Rayburn House Office Building. Alas, one’s wish is not always granted. Maybe Kelly hoped he was back home in Villa Rica, Ga. — population 9,800. One of five private investigators charged with finding the source of boardroom leaks to the press at Hewlett-Packard Co., Kelly sat last Thursday, Sept. 28, before a subcommittee of the House Energy and Commerce Committee along with H-P corporate royalty Patricia Dunn, ousted chairwoman of the Palo Alto, Calif., computer company; Ann Baskins, H-P’s freshly former general counsel; Fred Adler, head of IT security investigation; outside counsel Lawrence Sonsini; and Mark Hurd, H-P’s current president and chief executive. In an effort to stem boardroom leaks, company leaders worked with private investigators who, using a practice known as “pretexting,” impersonated H-P board members, employees, and journalists. The hired guns also rifled through people’s trash, planted spies in newsrooms, obtained phone records, and spied on targeted individuals and their relatives — actions that “would make Richard Nixon blush were he still alive,” noted ranking committee member John Dingell (D-Mich.) in his opening remarks. And in the end, all five investigators, along with Baskin, refused to testify. Thursday’s hearing rivaled Busby Berkeley in its choreography. And its careful orchestration may have had to do with the army of lobbyists working for the computer giant. Days before the hearing, a tribe of K Street lobbyists descended on the Hill. Gary Fazzino, vice president of government and public affairs for H-P, says that Mehlman Vogel Castagnetti Inc. was involved in the company’s lobby efforts for the committee hearing. The firm has been with H-P for a decade. “They were the first client I ever landed in my life,” says David Castagnetti. And Stephen Ryan, a partner at Manatt Phelps & Phillips, who has had a 15-year relationship with H-P, also helped the company navigate the committee, says Fazzino. NOT IN GEORGIA ANYMORE Kelly, donning a pair of black pants and a tieless green-and-yellow plaid shirt that contrasted with his crown of burnt orange hair accented by graying sideburns, seemed surprised by the theatrics of the committee hearings, occasionally exhaling deeply and displaying an expression like that of a deer caught in the headlights. Kelly was subcontracted through Security Outsourcing Solutions Inc., the company Hewlett-Packard Co. hired to determine who on the company’s board was leaking sensitive information to the press. As for Hewlett-Packard, the scandal has shaken the company that Stanford University classmates Bill Hewlett and Dave Packard founded in 1939. Bill Lockyer, California’s attorney general, is investigating, and in one media report, he called H-P’s actions “colossally stupid.” The computer giant has become the poster child for pretexting, according to Kent Jarrell, a senior vice president and director of litigation communications at APCO Worldwide, a public affairs firm. “The behavior of the company is being defined by people’s changing views of this practice, and the more people find out about pretexting, the more they are outraged,” says Jarrell. “It’s hard to get in front of that and hard to contain something like this.” H-P’s rivals, Dell Inc. and Apple Computer Inc., are tight-lipped about their competitor’s troubles. As far as corporate scandals go, H-P’s current drama is more “a black eye in the long term versus a fatal gunshot wound,” according to Eric Dezenhall, owner of the high-risk communications firm Dezenhall Resources. The controversy reminds him of the case Ralph Nader brought against General Motors Corp. Nader’s 1965 tome, Unsafe at Any Speed, raised safety issues about American automobiles, particularly the Chevrolet Corvair, which was produced by a GM division. After the book was released, GM sought to discredit the activist by hiring private investigators to tap his phones and research his sex life. Nader sued GM for invasion of privacy, and the company was forced to settle the case for $410,000. When the H-P story broke, Nader was reminded of what happened to him 40 years ago. “It’s all the same genre,” says the former presidential candidate. THE A TEAM In the case of Hewlett-Packard there is nothing wrong with its products, something lawmakers went out of their way to praise last week. A company of humble origins (it began in a garage with two employees and a revenue of $5,369), H-P has grown considerably in size and its stock is publicly traded. In 2005 the company reported 150,000 employees and $86.7 million in sales. That kind of growth has led the company to hire scores of lobbyists and advisers to help it in Washington. According to a 2005 Washington Post article, H-P nearly doubled its 2004 budget for contract lobbyists to $734,000. In-house lobbying, according to Senate records, has climbed steadily over the years. In 1998, H-P spent $603,590 on in-house lobbying. In 2004 that figure rose to $940,000, and in the first half of 2006, H-P dished out $340,000. And that’s only what was spent on inside lobbyists. In 2005, H-P paid Mehlman Vogel Castagnetti Inc. $165,000 to lobby on CAFTA and “general technology issues,” according to Senate filing records. Castagnetti would only confirm that H-P is a client and directed further inquiries to the computer behemoth. Since 2003 the company has also retained Quinn Gillespie & Associates. Sonsini, chairman of the Palo Alto law firm Wilson Sonsini Goodrich & Rosati, has hired Akin Gump Strauss Hauer & Feld. Republican heavyweights Michael Madigan, the former election counsel to President George W. Bush, and Bill Paxon, the former New York congressman, helped navigate and educate Sonsini about the congressional hearing process. “I think it went very well,” Madigan says of Thursday’s hearing. “He’s [Sonsini] a dream client and a terrific witness because he’s a very down-to-earth and straightforward person in real life.” Sonsini’s firm has an office in Reston, Va., and plans to relocate to Washington. And Morrison & Foerster, the firm representing the recently ousted Dunn, prepared a hefty submission for the committee on her behalf, featuring letters of praise from friends and colleagues, including Libby Shafer of Shafer Vineyards in St. Helena, Calif., home of the sought-after 2002 Hillside Select Cabernet Sauvignon, which sells for $190 a bottle. Also included was a “Life History in Brief” of Dunn, noting, among many nuggets, that her father, a vaudevillian, “believed deeply in civil rights for minorities” and that Dunn “had dreams of becoming a journalist.” RAZZLE-DAZZLE Dunn may have learned something from her father. Hewlett-Packard executives were ready to perform, and the whole room was their stage — or so they must have hoped after spending thousands of dollars to write the script. “You try to avoid congressional hearings, but if you can’t, you [try to] understand what they are all about, [which is] the member of Congress getting exposure,” says Lawrence Barcella Jr., a partner in the litigation department at Paul Hastings. Both Congress and H-P gave ‘em the old razzle-dazzle last Thursday. Lawmakers in their opening statements took time to bemoan the practice of pretexting and also congratulated themselves for having the foresight six months ago to introduce the Prevention of Fraudulent Access to Phone Records Act, a measure that would allow the Federal Trade Commission to seek civil penalties against pretexters. Democrats criticized the Republican leadership for failing to allow a vote on this bill. “We need to pass H.R. 4943 today instead of naming post offices for the rest of the day,” said Rep. Janice Schakowsky (D-Ill.), mocking the rest of the legislative agenda before Congress adjourned on Sept. 29. And Dunn, looking weathered but well coifed and poised, noted in her testimony that Congress should create legislation that would better protect companies from leakers. But even Dunn needed support, and she received it from her company’s former general counsel. Shortly after Baskin took the Fifth, she approached Dunn in the audience, leaned over, clasped Dunn’s hand, and whispered in her former boss’s ear. Eyes pooled with tears, Baskin then pulled away and headed out the doors of the vast committee room into the lobby of the Rayburn building, where a throng of photographers waited.
Joe Crea can be contacted at [email protected].

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.