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Last October, Jon Hoak, 57, was appointed vice president and chief ethics and compliance officer for Hewlett-Packard, the scandal-plagued California technology company that made the news last year for apparently spying on its own board members and journalists. The practice, called pretexting, involved investigators who misrepresented themselves in order to obtain phone records to learn who had been leaking company information to the media. HP’s chairwoman, Patricia Dunn, and general counsel, Ann Baskins, resigned as a result of the scandal. (On Thursday, a California court dropped all charges against Dunn.) Last month, Mark Hurd, the company’s CEO and president, appointed former Morgan, Lewis & Bockius partner Michael Holston as the company’s general counsel.
Were you brought in as a result of the pretexting scandal? Without all that stuff, I probably wouldn’t be there.
Is this a new job? I’m in a new position because you’ve got the breadth of being ethics and compliance. I’m responsible for everything to do with the allegations that were related to the violations of our standards. In a broader sense, I’m looking at all areas of compliance. There has never been a comprehensive review of compliance activities across the company, so we’re doing an assessment of compliance, making sure we’ve got a compliance mechanism in place. What makes HP such a challenge is the breadth and scale of the company. HP operates in more than 170 countries around the world. We posted $92 billion in revenue in the last fiscal year. We’re assessing all of the activities across the three main business groups, looking at all activities across those. There is the IPG imaging group; PSG, which is notebook computers, handhelds, and consumer products; and TSG, the larger computers and the service business. We have 156,000 employees.
So what are you doing in your new position? I’m doing a lot of things — getting out to people both in the interior of the company and on the exterior, delivering the message. In the first couple of months I’ve been working on internal assessments. There are a lot of good people in the company doing compliance work. I’ve been meeting with the board and the executive committee to find out what was working and wasn’t working. The last month and a half I’ve spent a lot of time outside of California, in the field. I’ve been delivering a lot of messages about the importance of compliance to HP, talking about changes in our compliance structures, asking for their feedback, and delivering training. I’ve been to Beijing, Shanghai, Seoul, Hungary, Russia.
So what is Hewlett Packard doing differently now? That relates to allegations of our standards of business conduct, or SBC. My charter is to make sure to not have another event like the board-leak incident — that we don’t have that again. People clearly learned the lesson. We need to ask: What are the big risk areas we are facing and what can we do to stop them? With training, what kind of areas might we be facing? Internationally, we need to make sure that there is compliance with global trade regulations, paying attention to the Foreign Corrupt Practices Act, and to understand HP policy on that. We also have a large channel program through our distributors. As a company that serves customers through a variety of different channels, HP has to consider the channel implications when working with various legislative requirements around the world. A lot of money goes around, and with training, we need to take appropriate steps to make sure the money is not going in the wrong channels. We’re also doing training in conflicts of interest and rules on gifts and entertainment. We want to make sure we’re out front on that. One of the things that’s important, a lot of what I’m talking about, is getting back to basic HP values, back to the days of Bill [Hewlett] and Dave [Packard]. Part of my message is that we need to go back to those values.
Did HP learn any lessons from the scandal? Yes. To start, it’s not enough, especially if Hewlett-Packard wants to be legitimately compliant — you’ve got to be able to have a standard of behavior with uncompromising integrity, doing the right thing. We’ve traditionally taken a lot of pride in being an ethical company. A lot of people said, “How can this be us?” A lot of people took this very hard and very personally.
What’s your reception been like? I’ve been pleased. I’ve been going to places and having coffee talks, and I’ve been playing to SRO audiences.
Of course, you came in after the scandal. It probably makes it easier for me to have those conversations.
How did you get chosen for this role? Well, I started at Sidley & Austin, in the Chicago office. I was outside counsel for, and then in-house at AT&T, which is a company somewhat on the scale of HP. It was also similar to HP in that it was always life in a fishbowl. It was kind of an icon of business, which is what I think HP is now. And then from 1993 to 2006, I was general counsel for NCR Corp., which is on a smaller scale but a similar kind of company, high-tech with a global reach. And I’m not new to the area of ethics and compliance. Also, having worked with Mark Hurd [the former NCR executive who was appointed in March 2005 as HP's CEO and president], I knew what he is all about. He was embarrassed and saddened by what had happened at the company and wanted to put it in the right place.
Can you talk about your work with Bart Schwartz? [Hewlett-Packard has asked Schwartz, a former assistant U.S. attorney, to review the company's investigative practices and procedures.] He was a former prosecutor under Rudy Giuliani in New York, and also, he had run his own private investigative firm. We’re working on a comprehensive review of the ethics and compliance policies present at HP to ensure that something like the board leak never happens again. One of them is our investigator-procurement program. Within a company the size of Hewlett-Packard, there are a number of investigations involving the standards of business compliance, or gray marketing, or counterfeiting. We have the need to do investigations. But it doesn’t make sense to do it all internally, and we do bring in outside contractors. That’s where we got into real problems. Our program is to help us know who we’re dealing with. We’ve made changes to our contracts to prevent things like pretexting. But more importantly, we’ve designed a process, with application forms and due diligence, where you have to sign up for our standard contract, and you are required to submit your investigative plans. Then, on the back end, there are internal audits to make sure we’re following these steps, to make sure this doesn’t happen again. This ensures that we have the vision of what the contractors are doing. In the past, there wasn’t enough visibility or transparency in the company to make sure [pretexting] was not being done.
Anything else? There’s also a new ethics and compliance committee, made up of the general counsel, the CFO, the head of human resources, myself, and then the head of one of our business groups, Ann Livermore, with TSG. That group has overall ownership, and a much more hands-on role.
Can you talk about the size of the legal department? We have 680 people in our legal department. I work hand in hand with the others in the legal department.
So you’re not part of the legal department yourself? We work closely with the legal department, human resources, and the comptroller of the organization. But we’re in flux. Right now I report to the CEO and the audit committee, but I expect that to change, and we’ll become part of the legal department. I’m not at the moment reporting to the general counsel, Mike Holston. But we are working very closely with the legal department. We’re very much intertwined.
What’s your staff like, then? There are 10 of us, with some lawyers, but we’re not performing in a lawyer role. I have two new hires as part of the new program. Gaynelle Jones, who was already at HP and is a former U.S. attorney in Houston — she’s responsible for the SBC, all activities related to the SBC. And also, there’s David Giza, who started March 12. He came from Snap-On Tools and was their chief ethics and compliance officer. I have two high-level people to work with me.
It looks as if you’ve been doing a bit of outreach, too. Yes, I’ve been getting out and talking to ethics people in the field, getting their takes on best practices. Through the CEO and the senior people at HP, I’ve been chartered to create a world-class ethics and compliance program. Two weeks ago, for example, we had a conference with the top 150 people in the company, and our CEO ticked off the top dozen things he would be giving his personal time and attention. And compliance was one of them. We talk about the tone at the top, what the CEO and senior managers are saying and what they do. The board is very committed to ethics and compliance. In my first couple of months, I’ve been just getting my arms around what we’ve been doing.
What was your reaction when HP called you? I was very pleased and excited. I had worked with Mark [Hurd] at NCR. He has great energy and passion, and this was a chance to get back and work with him. I was and am thrilled to be there.
What’s the general reaction been like? People have been extremely open and receptive to me. It’s been a little bit of a surprise to me. It’s a good time to be there. People have been tremendously interested in re-establishing HP as a leader in ethical behavior.
Do you have time for outside interests these days? I’m in the process of moving from Ohio to California. Normally, I like golf and any outdoor activities like skiing, hiking, backpacking.
Read any good books? I’m reading the Lincoln book, Team of Rivals [by Doris Kearns Goodwin]. One of my friends says it’s one of the best business books he’s ever read. It’s all about leadership and putting a team together.

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