In late 2006, the world's largest technology company, Palo Alto based, HP was in the news for all the wrong reasons. It got involved in what is known as 'pretexting' scandal. We are giving below as to what happened.
The BOD of HP felt vulnerable because they felt that confidential and strategic information from it was leaking to the press. They were rightly concerned and had every right to take action and protect their interests. The BOD was upset and hence emotional in its reactions. Any decision taken under duress or emotion, tends to be invariably wrong and has far reaching consequences. In such cases, what is done by intelligence agencies must be practiced to trace the leak. It is a typical 'cloak and dagger', slow and painstaking operation. It takes a long time but the suspect/s will be nailed one day. Who was ultimately responsible for internal security ? Most security people take care of 'breaking in' but they forget 'breaking out'. Any breach of security is always an inside job. When everybody is suspect, it is better to revamp the team completely. How will the shareholders react ? How will the markets react ? How will other stakeholders react ? All must be carefully considered.
A decision to investigate the leak was undertaken using an outside party which carried a very high risk. This party adopted a technique called 'pretexting'. It is fairly well known that in investigations of such nature, most investigators adopt practices which are not tenable in law. It would be naive or foolish or smug to expect otherwise. I am sure that the BOD of HP was anything but naive or foolish. Investigators are expected to deliver results. Such investigations by nature are covert and sly operations.
Nobody took notice of the serious irregularities in the investigation techniques employed. The BOD was getting periodic reports on the investigation. One of the board member's warnings were ignored till he resigned and insisted that the reason be made public.
Opposition to the idea was ignored or neutralized or overridden.
As a result, the entire BOD came under various investigations and the company was fined USD 14.6 million. The Chairman of the BOD was replaced. The amount is too small for a company like HP. This scandal did not affect the company and its share prices. However, one of the 'In Search of Excellence' companies founded by Mr. Hewlett & Mr. Packard came under a passing cloud. This was done by professional managers and not by the owners.
This is an abridged version of the original pay article written on October 10, 2006.
© Copyright, Jul-24, 08 . Without prejudice. All rights reserved
HP pretexting scandal - To learn more about this author, visit Madhavan T Gopalachary's Website.
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Madhavan T Gopalachary
(Visit Madhavan's Website)
Madhavan Gopalachary, nick name "madgopes"
(g pronounced as in go) given by IIT
classmates, is a Mechanical Engineer and
an alumnus of Indian Institute of
Technology, Madras having passed out
specializing in IC Engines &
Thermodynamics.
He has nearly 35 years of experience in
the Corporate World. He started off as a
trainee and handled sales, marketing,
manufacturing, product management, profit
center management, strategic planning and
corporate development including R & D in
various organizations and at various
levels before becoming a CEO. His last two
professional assignments were at CEO level
before embarking to start management
consultancy business on January 01, 1998.
He has worked for British, Swedish MNCs as
well as very large Indian business houses.
He has spent a large portion of his time
from June 1998 till date in East African
Countries practicing as an independent
Management Consultant.
More details can be obtained at the
following web sites:
mmg.name
/mtg.html;
mmgconsu
lting.biz/
Madhavan's articles can be accessed at www.madgopes.com
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