Updated from 5:17 p.m. EDT
Speaking to the press at
Palo Alto, Calif., headquarters, CEO Mark Hurd apologized for the company's conduct in spying on board members and journalists and outlined a series of actions the company was taking as various government inquiries into the affair gain steam.
H-P Chairwoman Patricia Dunn, who initiated the investigation, will resign effective immediately, said Hurd. Earlier this month, H-P had said Dunn would resign in early 2007.
Hurd's comments represented his first disclosure about his role in the affair, since details of H-P's controversial efforts to discover the source of media leaks became public more than two weeks ago. Those efforts, it is now clear, included using the social security numbers of board members and journalists to access their personal phone records, as well as physical surveillance of one board member and his family at his home and on a business trip.
"What began as an investigation with the best intentions has ended up turning in a direction we could not have possibly anticipated," said Hurd.
Hurd provided a timeline of H-P's leak investigation, which he said consisted of two distinct phases between 2005 and 2006, and his personal involvement. He said he attended a couple of meetings during which updates of the investigation were provided.
Hurd said he had not read a March 2006 report addressed to him and others, in which the investigative team acknowledges using pretexting -- the practice of impersonating somebody to gain access to their personal information -- as a means of identifying the source of the leaks, albeit with the assurance that the practice was legal.
Hurd also acknowledged that he approved an infamous email sent to a reporter at
that was embedded with spying technology. Hurd said he approved of the concept and content of the duplicitous email, which was designed to appear as if it were from a disgruntled senior executive at H-P. But Hurd said he did not know about the tracing mechanism hidden within the message.
Calling some of the findings "disturbing," Hurd apologized to the journalists who were investigated and everyone else impacted.
But while condemning the tactics, Hurd defended the intent of the investigation to stop leaks of confidential information which violated the company's standards of conduct and ethics policies.
"This is a complicated situation, and the more I look into it, the more complicated it becomes," said Hurd, noting that all the facts surrounding the affair may never be known due to the number of outsiders involved.
After more than two weeks of being rocked by an incessant string of revelations about its controversial efforts to find leakers within the company, H-P is scrambling to shift from defensive mode to offense and wrest some degree of control over the story.
But even as H-P hastily organized Friday's press conference, there were signs that the company was largely reacting to events largely outside its ability to control. While the briefing was initially supposed to be followed by a Q&A with Hurd, the company cancelled the question session just hours before the conference.
Citing Hurd's recent decision to testify before a Congressional committee looking into the matter later this month, H-P said he would not be able to take questions from the media. It was unclear why the two would be mutually exclusive.
In addition to the upcoming hearing by a subcommittee of the U.S. House of Representatives, the
Securities and Exchange Commission
and the U.S. Department of Justice are looking into H-P's tactics. California Attorney General Bill Lockyer is conducting an active criminal investigation into the matter.
Lockyer has said he has enough information to bring criminal indictments, although he noted earlier Friday that, thus far, there isn't any information linking Hurd to any illegal activities.
The possibility that Hurd could get ensnared in the scandal caused H-P's shares to slip more than 5% on Thursday, as news reports suggested his involvement in the spying scandal was deeper than initially thought. Hurd is credited with reviving the technology giant's fortunes during his 18 months at the helm.
H-P shares gained 1.4%, or 49 cents, to $35.60 in extended trading Friday, following the press briefing.
H-P has maintained that outside investigators committed the various controversial actions on their own initiative. But the accounts provided by Hurd and Mike Holston, an attorney heading up H-P's internal investigation of the affair who appeared alongside Hurd at the briefing, show a level of close involvement by company officials, particularly H-P's in-house legal and security personnel.
H-P Senior Counsel Kevin Hunsaker directed the second phase of H-P's leak investigation in early 2006, dubbed Kona 2, during which time the most egregious actions occurred.
According to Holston, Hurd was informed that the Kona 2 team had been assembled and was beginning to identify the source of the leaks. Patricia Dunn, and to a lesser-extent General Counsel Ann Baskins, were provided with regular updates on the progress of Kona 2 over a three-month period, although both were assured by Hunsaker and independent investigators that the techniques employed were within the law.
And according to Holston, one H-P employee's social security number was provided to outside investigators by H-P's head of global security, Tony Gentilucci.
Holston said his team has collected more than one million pages of documents related to the leak investigation so far.
He said that at this point, there was no evidence of telephone wiretapping, tracking of computer keystrokes or of undercover operations within the news bureaus of
The Wall Street Journal.
With Dunn's exit, Hurd will become chairman, in addition to his role as CEO and president. Richard Hackborn has been named lead independent director of the company.
H-P also said Friday that it has retained former U.S. prosecutor Bar Schwartz to perform an independent review of the investigative methods and the company's standard of business conduct practices.
"Now that we know the depth of what has transpired, I take full accountability to drive the actions to set it right," said Hurd.