HP announced that it has entered into an agreement with the California Attorney General to resolve civil claims arising from the previously disclosed investigation into leaks from its board of directors.
The agreement, filed today in Santa Clara County Superior Court, calls for HP to pay $14.5 million and to implement a series of measures designed to ensure that its internal investigations are conducted in accordance with California law and with the company's high ethical standards.
"We are pleased to settle this matter with the Attorney General and are committed to ensuring that HP regains its standing as a global leader in corporate ethics and responsibility," said Mark Hurd, HP chairman and chief executive officer.
There was no finding of liability against HP as part of the settlement, which includes an injunction and agreement that the California Attorney General will not pursue civil claims against HP or against its current and former directors, officers and employees.
Under the agreement, $13.5 million of HP's payment will be used to create a Privacy and Piracy Fund to assist California state prosecutors in investigating and prosecuting consumer privacy and information piracy violations. In addition, $650,000 will be used to pay statutory damages and $350,000 will reimburse the Attorney General's office for the costs of its investigation.
The agreement sets out a number of internal processes and controls which HP determined in consultation with the Attorney General and will maintain for five years. Among these are:
The board has designated its newest member, G. Kennedy Thompson, who serves as chief executive officer of Wachovia Corp., as its independent director with responsibility for reviewing and reporting on HP's compliance with legal and ethical requirements related to the conduct of investigations to the board.
"HP has traditionally been a leader in the area of business ethics and I look forward to working with the management team to help ensure that the company operates with the highest standards of integrity," Thompson said.
Oversight of the ethics and compliance program will be run by Jon Hoak, whom the company appointed in October to the newly created position of chief ethics and compliance officer. Hoak had previously served for more than 12 years as senior vice president and general counsel for NCR, where he oversaw the ethics organization.
As "Qualified Authority," HP is utilizing the services of Bart M. Schwartz to review its investigative processes. Schwartz was retained by HP in September and previously served under U.S. Attorney Rudolph Giuliani as chief of the Criminal Division in the Southern District of New York.
The company's chief privacy officer, Scott Taylor, named to his post in June, will expand his role to include review of HP's investigative processes to ensure that they appropriately address matters related to privacy and ethics. He will also continue to work on assuring the privacy of information obtained by HP in the normal course of business.
The Compliance Council will be headed by the chief compliance officer and will include the chief privacy officer along with other representatives from the company''s legal and ethics functions.
HP is engaged in reviewing its employee and vendor codes to ensure that they comply with the undertakings provided to the Attorney General.
