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SACRAMENTO � Hewlett-Packard will seed a $13.5 million state fund that will finance future prosecutions of privacy and intellectual property crimes, under terms of a civil settlement stemming from the company’s highly publicized leak investigation. The Palo Alto company will also pay a $650,000 fine and $350,000 to cover the attorney general’s probe into allegations that Hewlett-Packard executives authorized the use of “pretexting,” or lying, to obtain the private phone records of board members and reporters. In exchange, state prosecutors agreed not to file civil claims against former and current company officers and employees, according to documents filed Thursday in Santa Clara County Superior Court. “This settlement should help guide companies across the country as they seek to protect confidential business information without violating corporate ethics or privacy rights,” Attorney General Bill Lockyer said in a prepared statement. “And the new fund will help ensure that when businesses cross the legal line, they will be held accountable.” The agreement does not affect criminal charges pending against former HP Chairwoman Patricia Dunn; ousted senior counsel and ethics director Kevin Hunsaker; and the three contractors who allegedly obtained the private data: private investigator Ronald DeLia, records dealer Joseph DePante, and Bryan Wagner, who performed work for DePante.
PRETEXT IN CONTEXT

Follow all the coverage of Hewlett-Packard’s boardroom spying scandal � and the continuing legal fallout.

“We are pleased to settle this matter with the attorney general and are committed to ensuring that HP regains its standing as a global leader in corporate ethics and responsibility,” Mark Hurd, company chairman and chief executive officer, said in a press release. Hewlett-Packard’s troubles began last year when Dunn launched an investigation to find out who was leaking information to the media about company plans. State attorneys say company-hired investigators posed as reporters and HP officers, sometimes using Social Security numbers provided by HP, to secure personal call records. When details of the investigation became public this year, Congress summoned company executives and others to appear at what would become a tense hearing. While documents and public comments suggest Hurd and former General Counsel Ann Baskins knew about some aspects of the investigation, neither one has been charged criminally. Under terms of Thursday’s settlement, Hewlett-Packard agreed to appoint an “independent” director � specifically, new board member G. Kennedy Thompson � to track future company investigations and report any wrongdoing to the attorney general. The company will also “enhance” its employee and board member training on investigations, business ethics and the hiring of outside counsel. Prosecutors will be allowed to spend up to $1 million annually from the new $13.5 million Privacy and Piracy Fund. Half of the yearly allotment will go to district attorneys’ investigations.

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