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October 05, 2006

The Dunn indictment

HP logo3.JPGSo, let's see if I've got this straight.

Patricia Dunn, who was probably a bit over her head in her role as chairperson of the Hewlett-Packard board of directors, uses bad judgment in authorizing an investigation into fellow board members over leaks of confidential company information. Although dubious, her judgment to proceed with the investigation is ratified by both in-house and outside counsel of the company, as well as the CEO of the company.

After it is revealed that the investigation went over-the-top in examining phone records of various folks who may have been involved in the leaks, Dunn does the right thing by owning up in public statements and before Congress regarding her role in the matter, apologizes for her lapse in judgment and resigns from the board.

Subsequently, Dunn is indicted on felony charges stemming from the affair by this bird, whose judgment is questionable, to say the least. By the way, Dunn is scheduled to start six months of chemotherapy for recurrent ovarian cancer tomorrow.

Meanwhile, with the exception of a few bloggers, the key corporate issues driving the HP affair -- such as preservation of confidential company information in board deliberations and the impact of a dysfunctional board on a company -- are largely ignored.

So, a question for you. Based on the foregoing, why should any businessperson in the future, who gets embroiled in a similar lapse in judgment as Dunn here, try to do the right thing or be particularly concerned about the leaking of confidential company information? What policies are the Dunn indictment supposed to encourage? Not having lapses in judgment? Not much chance of that. Perhaps it would be better to encourage people to do the right thing, such as Dunn did. But then, we wouldn't have a need for an indictment, would we?

Posted by Tom at October 5, 2006 03:51 AM

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Comments

It seems to me the more relevant question is why would anyone want to serve on a Board? The only answers to that question that I can think of are (i) the money, (ii) the prestige or (iii) as a favor to a friend. Clearly, the prospect of prison for Directors has risen dramatically in the past five years. Since this prospect, in my opinion, entirely offsets the prestige benefit, and since (hopefully) your friends would not ask for a favor that might land you in prison, the only people that would take the job are those that determine the money is worth the risk. Based on current Board participation, that leaves Professors, I think.

Posted by: KRock [TypeKey Profile Page] at October 5, 2006 07:47 AM

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