Hewlett-Packard burns its reputation once again

One of the things that caught my attention in the delivery room the day my eldest son was born twenty three years ago was the number of medical devices and diagnostic machines manufactured by the Hewlett-Packard Co.

Back then, Hewlett-Packard was still known by its full name and not HP (except perhaps by company employees and Wall Street types) and enjoyed a reputation for not only designing and manufacturing quality products sold around the world, but also for fostering a spirit of corporate integrity and above all, honesty. Almost certainly, an ethos stemming from the company’s founders, Bill Hewlett and Dave Packard who started their little enterprise in a garage near Palo Alto, California back in 1939 with a reported total investment of $538.

One can only wonder how Mr. Hewlett (1913 - 2001) and Mr. Packard (1912 - 1996) would feel today if they knew how their company’s reputation has been so tarnished in recent years by one corporate misstep and/or scandal after another.

The latest revelation by current CEO Meg Whitman, that HP has asked the SEC along with the UK Serious Fraud Office to investigate alleged accounting irregularities at the recently acquired British company, Autonomy Corporation PLC, does not exactly bode well for the company on the global reputation front.  Neither does the reported $9 Billion write-down recently announced as a result of the troubled acquisition, let alone Ms. Whitman’s finger-pointing in the media specifically directed at Autonomy’s accountants, Deloitte, overtly suggesting that the accounting firm along with its client "cooked the books" and duped HP into buying the company.

Clearly, Hewlett-Packard's due dilligence before completing the deal back in 2011 was inadequate, and perhaps worse, by going public with some pretty damning allegations against both Deloitte and Autonomy’s former management, has stirred up a firestorm of counter accusations against the Palo Alto company including a statement by Autonomy founder Mike Lynch to the British press that joining HP was "like boarding a plane, realizing the engine is on fire and then going up to the cockpit only to find that the pilots are having a fight."

My own personal interest in Hewlett-Packard in the capacity of a consumer privacy advocate, dates back to the company’s spying scandal of 2006, when it was revealed that former HP chairwoman Patricia Dunn had hired a firm of independent security experts to investigate alleged leaks of confidential company information by members of the HP Board of Directors to the news media. The security experts in turn hired private investigators who reportedly set about using so called social engineering techniques which included pretexting (a form of identity fraud) in order to obtain the personal phone records of HP board members, along with journalists working for CNET, the New York Times and Wall Street Journal.

Unfortunately for Ms. Dunn, this illicit plot was discovered, ultimately resulting in her forced resignation from HP and worse, California Attorney General Bill Lockyer filing criminal charges against both her and other HP employees and contractors. These included four felony counts: fraudulent use of wire, radio or television transmissions; taking, copying, and using computer data without authorization; identity theft; and conspiracy.

A long suffering cancer patient who had undergone surgery in the summer of 2006, Ms. Dunn’s attorneys eventually managed to get the charges dismissed against her (to the surprise of many, including me) while the other HP defendants cut plea deals with the prosecutor.

Some positive things did however come out of the HP spying scandal. This included a congressional committee looking into the business practices of Hewlett-Packard and other large companies identified as using ID fraud as a business tool.

Documents and testimony provided to the House Energy and Commerce Committee in 2006 revealed that amongst others, LaSalle Bank (now part of Bank of America) Ford Motor Credit, and a unit of Wachovia Bank (now part of Wells Fargo) had also allegedly used investigators to obtain the personal telephone call records of individual consumers using pretexting and other unlawful techniques.

In response to this unlawful conduct, Congress passed the Telephone Records and Privacy Protection Act of 2006 (H109-4709) which was signed into law by President Bush in 2007.  Clearly, the intent of this act was to reinforce existing federal laws including the Gramm- Leach- Bliley Act of 1999 which already outlawed pretexting and other techniques for obtaining private and confidential information under false pretenses.

Unfortunately however, the 2006 federal law did not stop pretexting which is still widely used today by some investigators (also known as information brokers or skip tracers) working for the debt collection and vehicle repossession industry.

Returning to the topic of HP, and its problems, following Ms. Dunn's departure in 2006, Mark Hurd was appointed chairman of the company. Four years later, Mr. Hurd resigned after alleged personal expense account irregularities were discovered and a sexual harassment allegation surfaced making his future at HP untenable.

Mark Hurd was followed Léo Apotheker who served briefly as the Chief Executive Officer of Hewlett-Packard from November 2010 until his firing in September 2011.

In January 2011, former eBay executive and California gubernatorial candidate, Meg Whitman joined the Hewlett-Packard board and was later appointed President and CEO in September 2011 after Mr. Apotheker’s firing.

Amongst other things, Ms. Whitman voted as a board member to purchase Autonomy, a company which sells a broad range of enterprise search and knowledge management software products including what I would describe as digital eavesdropping technology used by amongst others, businesses (including the financial services industry) and government agencies to monitor telephone calls, emails and other communications for a variety of purposes.

Interestingly and perhaps troubling, depending on your point of view, Autonomy software can "listen" through a million hours of telephone conversations, and find key words or phrases which may be of interest to, for example, government investigators or law enforcement officials seeking information on an individual or group of individuals for predictive policing purposes.

A good example is the case of Société Générale’s rogue trader, Jérôme Kerviel, who was convicted through the use of Autonomy software by law enforcement authorities.

Almost certainly, Ms. Whitman, along with the other HP board members believed that Autonomy was a good fit when they agreed to purchase the company in 2011.  But alas, things have not worked out and Ms. Whitman, who is now embroiled in a trans-Atlantic blame game with Autonomy founder Mike Lynch, is being closely watched and reported on by the worlds news media.  Not exactly a good thing for Hewlett-Packard's global reputation.
　


　
　
　
　
　
　
　
　
　
　
　
　

Identity fraud rings identified operating in Southern States

 

 

This month, consumer risk management firm, ID Analytics of San Diego, published a study indicating that there are more than 10,000 identity fraud rings operating in the US, and many are in southern states.

According to the report, the study is the first to investigate the interconnections of identity manipulators and identity fraudsters to identity rings of criminals working in collaboration.

So called hotbeds for fraud rings include; Alabama, the Carolinas, Delaware, Georgia, Mississippi and Texas.

The study which reportedly looked at approximately 1.7 billion identity risk events demonstrates once again how sophisticated consumer analytics data bases are truly becoming.

One can only wonder if federal, state and local law enforcement agencies will receive a copy of this study and actually use it in a meaningful way. The fact is, based on past history, reports and studies relating to the activities of identity fraud rings operating here in the US seldom results in prosecutions.

Data mining for fraud detection purposes is a good thing. However, data mining should be an inclusive exercise which not only helps protect the safety and security of financial services firms, but also assists victims of identity fraud in learning the most likely source of a data breach involving their personal identifiable information.

Almost certainly, this suggestion would meet with strong opposition from both the consumer data and financial services industries which would most likely sight potential liability issues.  However, with carefully crafted federal legislation including a mandatory notification process in place, American consumers could (and should) have the ability to search and locate information on a central database which would help them identify the source of a past data breach involving their personal information. Which would be a good thing.