Hewlett-Packard said last night that it would pay California $14.5m to settle a civil case related to boardroom leak investigations that led to the resignation of Chairman Patricia Dunn.
HP said that under the agreement, filed in Santa Clara County Superior Court, it would also put measures in place to ensure its internal investigations comply with state law.
During the company's internal probes, investigators impersonated HP board members, employees and journalists to obtain their private telephone records. The probes, which came to light in September, sullied the reputation of a company that prided itself on integrity.
California Attorney General Bill Lockyer filed criminal charges against Dunn, who resigned on September 22, and four others in October because of tactics used in HP's efforts in 2005 and 2006 to find the source of media leaks.
'The Hewlett-Packard incident has helped shine a national spotlight on a major privacy protection problem,' Lockyer said. 'Fortunately, Hewlett-Packard is not Enron. I commend the firm for cooperating instead of stonewalling, for taking instead of shirking responsibility,' he added.
HP said that $13.5m of the total amount would be used to create a Privacy and Piracy Fund to help California prosecutors in investigating consumer privacy and piracy violations. Another $650,000 would be used to pay statutory damages and $350,000 would reimburse the Attorney General's office for its investigation.
HP also said there was no finding of liability against it as part of the settlement. The California attorney general will not pursue civil claims against the company or against its current and former directors, officers and employees, HP said.
Dunn, along with four other defendants named face four felony charges: conspiracy; fraudulent use of wire, radio or television transmissions; taking, copying and using computer data; and using personal identifying information without authorization. Each count could bring a maximum of three years in prison.
Also charged were former HP ethics officer Kevin Hunsaker, who has left HP, and investigators Bryan Wagner, Ronald Delia and Matthew DePante of information supplier Action Research Group.
