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HP Spying Scandal Puts Focus on Privacy

Some analysts and lawmakers call for expanded protection for personal records.

October 06, 2006|James S. Granelli, Charles Piller And Jim Puzzanghera | Times Staff Writers

SAN JOSE — Former Hewlett-Packard Co. Chairwoman Patricia C. Dunn surrendered to authorities Thursday as privacy experts worried that the alleged illegal spying she ordered was only a glimpse at how big business could view personal records.

"What we're looking at is the fruit of decades of allowing these kind of privacy concerns to get very low, if any, priority," said Lauren Weinstein, founder of the Privacy Forum, an education and outreach group in Los Angeles. "Perhaps this is best viewed as sort of a harbinger of much worse to come."

HP's spying scandal -- in which private investigators gathered confidential phone records among other efforts to find the source of boardroom leaks to the media -- has focused attention on privacy the way debacles at Enron Corp. and WorldCom Inc. shone a light on accounting practices.

"For working Americans in 2001, the scandal surrounding Enron challenged their trust in the markets," Rep. Tammy Baldwin (D-Wis.) said. "The HP scandal is shattering their expectations of telecommunications privacy."

Dunn and others ensnared by the allegations testified last week before a House committee that featured blistering indictments of the company's tactics by members of Congress.

A week to the day after her Capitol Hill testimony, Dunn braved a phalanx of some two dozen news cameras at the Santa Clara County Superior Court building for her first appearance after the state filed felony charges against her and four others Wednesday.

With a slight smile, an air of relaxed confidence and accompanied by her husband, financial expert William Jahnke, Dunn entered the courtroom of Judge Alfonso Fernandez. Her expression changed to quiet resignation as she waited for the short hearing to begin.

In less than five minutes, Dunn agreed to the terms of her release on her own recognizance and to return for her arraignment Nov. 17, when she is expected to plead not guilty. She was then booked at the sheriff's department next door.

She and one of her lawyers, S. Raj Chatterjee, declined to comment.

Dunn and her codefendants, including Kevin T. Hunsaker, HP's former senior counsel who was in charge of the probe, are accused of conspiracy, identity theft and violations of two other state laws in overseeing and operating a corporate investigation.

Santa Clara University law professor Stephen Diamond said he was "reluctant to jump to the conclusion" that the HP case portends serious privacy concerns elsewhere.

But, he pointed out, "the culture in most corporations is, if it comes from the CEO or the chairman, everybody snaps to attention. That's what the HP legal department did here."

Stanford University law professor Robert Weisberg said he saw the issue as the law needing time to catch up to new ways that "sleazy people" invent to invade privacy. Other corporations already are making sure they're not acting as HP did, he said.

"You could say, 'What could people be thinking? How could they be so foolish?' " Weisberg said. "But people will always find ways to be foolish again, just in different ways than HP did."

To that end, privacy advocates want to expand the legal protections over personal information.

"We'd like a law that could say that phone records and all commercial records containing personal information should be kept private," said Mark Rotenberg, executive director of the Electronic Privacy Information Center in Washington.

In California, Gov. Arnold Schwarzenegger signed into law a bill that goes into effect Jan. 1 to make it illegal to impersonate customers to obtain phone records.

Rep. Michael Burgess (R-Texas), like many in Congress, wants federal action. "The war on privacy is fully engaged, and we need to provide consumers with additional protections," he said.

Some legal experts aren't ready to sound the alarm just yet on the overall implications of the HP case.

"You don't have a lot of privacy in this world anymore," said New York securities lawyer Richard Swanson. "People's expectations of privacy are much greater than what technology today permits them."

White-collar defense lawyer Jan Handzlik said he was baffled by the HP operation. "It's like some sort of socio-biology case where creatures responded in a certain way and then, somehow, lost their marbles completely."

More unfathomable, he said, is that an internal investigation could get "so out of control that it would result in charges against the chairperson of a major Fortune 500 company."

Earlier Thursday, Hunsaker turned himself in at a sheriff's substation for booking and was released.

Hunsaker's lawyer, Michael N. Pancer of San Diego, said his client would appear in court Nov. 17 for arraignment. Pancer also released a lengthy statement that denied any wrongdoing and asserted that his client "regularly briefed his superiors" on the investigation.

Granelli reported from Los Angeles, Piller from San Jose and Puzzanghera from Washington.

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