Updated from 12:19 p.m. EDT
The ground under
Chairwoman Patricia Dunn's feet eroded a little more on Friday, as the scandal over the company's attempts to squelch press leaks continued to gather momentum.
Dunn said she wasn't aware of the potentially illegal methods used by investigators hired by H-P, which included clandestinely obtaining the personal phone records of board members and journalists.
But she said she'd resign if asked by the board. For the time being, however, Dunn said she had no plans to quit the board.
"I serve entirely at the pleasure of the board," Dunn told
The Wall Street Journal
. "If they determine it not longer is in the interest of shareholders to remain chairman or director, I will do so."
H-P's board will have a special meeting by phone this weekend to discuss the situation, according to the report.
Former H-P board member Tom Perkins has reportedly referred the matter to federal prosecutors in San Francisco and New York.
"We have made criminal referrals, and our understanding is that they are being investigated and being handled in the normal course," Viet Dinh, Perkins' lawyer, told
Dunn, a former CEO of
Barclays Global Investors
, is at the center of a storm that has thrown H-P into damage-control mode. The Palo Alto, Calif., computer maker, which has wowed Wall Street for the past year by boosting its profits, is now being rocked by a string of revelations regarding the boardroom leak affair.
On Thursday, H-P said that the phone records of nine journalists were secretly obtained by private investigators hired by H-P in an effort to determine who was leaking information to the media.
That's in addition to the unauthorized access of the phone records of former board member Perkins, who has alleged that his private phone conversations and emails were secretly recorded.
In an extraordinary
Securities and Exchange Commission
filing earlier this week, H-P said that no eavesdropping or secret recording occurred, but acknowledged that some form of "pretexting" was used to obtain phone record information.
The filing defined pretexting as a technique used by investigators to obtain individuals' personal information by disguising their identity.
H-P said that although pretexting was not "generally unlawful" at the time, it could not confirm that the investigator and parties subcontracted by it "complied in all respects with applicable law."
California Attorney General Bill Lockyer is conducting an active criminal investigation into the incidents, which would seem to violate two state statutes regarding identity theft and unauthorized computer access.
The attorney general's office has obtained a warrant to gather information from
, the Internet service provider where the IP address of the suspected pretexter has been traced to.
The warrant requires Cox to disclose the identity of the subscriber whose computer was assigned the IP address, the subscriber's connection logs, as well as all stored electronic communications, including email and buddy lists.
The warrant said that the attorney general's office is also conducting a parallel civil investigation into the matter.
The SEC is also looking into whether H-P accurately portrayed the resignation of Tom Perkins, in the wake of the leak investigation.
Jesse Choper, a professor at the University of California-Berkeley's Boalt Hall School of Law, says that the liability of Dunn and H-P in the affair will depend on intent.
"The board has the right to rely on reports given to it by people with knowledge -- expert opinions and so forth," said Choper.
The question is did they know that pretexting was unlawful and should they have asked more questions to ascertain the legality of the practice -- particularly if the matter was of a significant level of importance to the company, Choper said.
Regardless of the legal liability however, some said that there was no way Dunn could continue as chair of H-P's board.
"Her personal credibility has been damaged, I would say irrevocably," said James Post, a professor of management at Boston University, who teaches governance and ethics.
Spying on journalists is way over the moral line, he said. "That's just clearly beyond any legitimate kind of action to protect the company," said Post.
And given the seemingly dysfunctional and divided state of H-P's board, Post said the company needs someone trustworthy and decisive to step in and start the healing process.
Shares of H-P were up 1.7%, or 61 cents, at $36.03 in late trading Friday.