Just hours before a California judge dismissed all charges against Patricia Dunn yesterday, several prominent media outlets reported that the former Hewlett-Packard chairwoman would plead guilty to the charges against her. To make matters worse, several headline qriters simplified the story and wrote as if the guilty plea had already happened. Everyone from CNN to the Associated Press to the New York Times seems to have got caught up in the confusion.
So how did the phony story get started? Apparently it was an email from the California attorney general’s office that started it all. Here’s how Rob Kelley at CNNMoney put it:
Earlier today the California attorney general’s office issued an incorrect e-mail press release stating that defendants would enter guilty pleas to the wire fraud charges.
A representative in the attorney general’s press office said the morning’s release was a mistake.
“It was just a mistake by me,” said Nathan Barankin. “Our lawyers told me that the defendants were going to court and mak[ing] a plea. I mistakenly assumed that they’d be making a plea of guilty.”
Dunn’s lawyer, Jim Brosnahan, said that the agreement to dismiss her case came Tuesday afternoon at a 45-minute meeting between defense lawyers, a representative from the attorney general’s office, and Judge Ray Cunningham.
It’s good to know that the people who work for the California attorney general’s office assume defendants are guilty–or at least making a plea of guilty–when they go to court. And when we say “good” we mean “terrifying” Charges against HP’s Dunn dropped [CnnMoney.com]
A California judge dismissed charges against former Hewlett-Packard chairwoman Patricia “Pattie Cake” Dunn, her lawyer said today. The charges stemmed from a corporate spying scandal that arose last year and led to her ouster. Dunn and others were accused of authorizing an investigation that involved a controversial practice known as “pretexting” to obtain the phone records of journalists and HP board member.
Earlier today it had been reported in several media outlets–the New York Times, AP, CNN–that Dunn would plead guilty. The California state attorney general was apparently the source of these reports. We’d put up links but they are disappearing faster than a bull in a sub-prime mortgage shop.
Here’s the press release from James Brosnahan of Morrison & Foerster, Patricia Dunn’s lead attorney.
SAN FRANCISCO, March 14 /PRNewswire/ — James Brosnahan of Morrison &
Foerster, lead counsel for former Hewlett-Packard Chairman Patricia Dunn,
today announced that all charges against Ms. Dunn have been dismissed by
“We have maintained from the beginning that Pattie Dunn was innocent
and thus vigorously fought the charges against her. Today, the judge
dismissed the case. Ms. Dunn did not plead to anything. This is the right
result,” stated Mr. Brosnahan.
“We had numerous discussions with the California Attorney General’s
office and appreciate very much that the administration of the new Attorney
General decided to allow the judge to dismiss the case against Pattie
Dunn,” he added.
Ms. Dunn stated, “I am pleased that this matter has been resolved
fairly, and want to express my deep gratitude to my husband and family, who
never lost faith in me throughout this ordeal. I have been strengthened by
wonderful support during this difficult time — both from my dear friends
and from people I have never met. I have always had faith that the truth
would win out and justice would be served — and it has been.”
When we read the report in the San Jose Mercury News on Tuesday that venture capitalist and former Hewlett-Packard board member Tom Perkins was making pointed remarks about corporate governance—including some fierce jabs at former H-P board chair Pattie Dunn—we all thought: why bring this up now?
After all, Tom won this fight last year, right? Pattie lost her position at the head of the board table, then had to leave the board altogether. She became a “fallen” or “disgraced” “former corporate leader.” Her name became synonymous with corporate scandal, and especially pretexting. She was indicted by the California attorney general. She even got cancer. Isn’t it time to leave Pattie in peace? Even DealBreaker hadn’t picked on “Pattie Cakes” for months.
So why now? We thought maybe it was the book. Tom’s got his memoirs coming out soon. Maybe he wants the publicity. It sounds a bit cheap to drag a sick, unemployed and indicted woman’s shame back before the public just to sell a few more copies of a book. Especially when you are already rich enough to afford a $100 million yacht. Does Tom Perkins really need to worry about whether his book sells?
Today the Wall Street Journal‘s editorial page runs the full text of the speech that was reported earlier in the Mercury News. And there’s one line that might shed some light on why Tom is dragging out the whole H-P thing again instead of sailing around the South Pacific.
And so, when the “wet kiss” Cnet.com article about how great Mark Hurd was at strategy appeared, Ms. Fiorina and I agree that Ms. Dunn launched the now infamous “Kona” spying investigation aimed at ridding the board of those directors (the tech committee) most familiar with strategy, whom Pattie assumed were the “evil” leakers. All this is documented in a characteristically long-winded New Yorker article of Feb. 19.
That’s right! It was the New Yorker! And it’s long-windedness!
Of course, we have no idea what Tom’s talking about because, let’s face it, it was the New Yorker. That’s the magazine that’s read by people who want to appear brainy but don’t really want to be bothered with doing stuff like learning very much. But we’ll check it out and report back.
See how far we’ll go for you? We’ll even read the New Yorker!
The ‘Compliance’ Board [Wall Street Journal]
Hey, remember yesterday when we did a couple of posts that weren’t about Tuesday’s market plunge? Remember the one about the remarks about corporate governance by venture capitalist and former Hewlett-Packard board member Tom Perkins? No? You don’t read our posts about corporate governance because (as one reader told us yesterday) “corporate governance is so f—ing boring?”
Well, it’s not quite as boring anymore. Perkins drew a distinction between compliance oriented corporate boards and business guidance oriented boards. Seems like a useful distinction, right? Well, apparently it didn’t go over well with the lawyer for former Hewlett-Packard chairwoman Pattie Dunn. So the Dunnsters are fighting back. And this time it’s personal.
From the San Jose Mercury News:
“Tom Perkins attacked my client. He did so unfairly. He did so falsely when he knows she cannot answer him,” he said in a statement e-mailed to the news media. Dunn can’t respond directly to Perkins’ accusations because of the legal case pending against her. The case erupted after Perkins quit over the way Dunn, then-HP chair, conducted an investigation into boardroom leaks to journalists.
“He’s rewriting the history of what happened,” Brosnahan told the Mercury News. “Normally, I wouldn’t say anything, but when he attacks my client personally, we’re not going to sit here and let him get away with it. It’s just awful what he did.”
Tom Perkins apparently didn’t respond to this. So just imagine him chuckling as he sails his $100 million yacht into the horizon.
[No clue why Pattie’s getting her, uhm, lawyers all in a twist about this? Well, to put it mildly, Pattie and Perkins have a bit of a history together. Feel free to check out our H-P Archives for all the gruesome details.] Dunn’s lawyer blasts Perkins [Mercury News]
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Our second candidate for DealBreaker of the Year might be a bit unexpected choice—former Hewlett Packard board chairman Patricia Dunn. Just today news broke that Hewlett Packard will have to pay $14.5 million to settle the civil case stemming from the spying scandal that resulted in Patti Cakes stepping down. But the DealBreaker of the Year award is beyond good and evil. Sometimes the world of finance is moved by the forces of light and sometimes by the forces of darkness. This year, Pattie Cakes clearly claimed her place in American corporate history, on the front pages of the business sections and, certainly, all over DealBreaker.
The pretexting story is now very well-known. At least one member of the board of directors of Hewlett Packard was leaking information to the press. The board investigated but the leaks persisted. A second round of investigations was authorized by Dunn, and that’s when the trouble started. The investigators charged with finding the leak lied to telephone companies to obtain the phone records of board members and journalists, and when news of this kind of corporate spying broke, America was scandalized. Hearings on Capitol Hill were called, criminal charges were filed, heads rolled. Dunn’s now jobless and facing possible jail time while she attempts to deal with cancer.
But long before she became known as Pretexting Pattie, Dunn was regarded as one of the woman the most accomplished and powerful women in corporate America. There may yet be more chapters to be written in this American life.
In many ways, Dunn’s story is tragic because she did so many things right. Well, if not right, then according to the books—she was a true believer in the reigning ideology of corporate governance and it was this zeal that was her undoing. This would have been a very different year if not for Patricia Dunn, which is why we’ve made her a candidate for DealBreaker of the Year.
Value Added: Other than the pretexting misstep, Dunn’s tenure at the head of Hewlett Packard’s board is considered exemplary. Her downfall also helped teach us two important lessons. First, that there is something wrong with the process-obsessed view of corporate governance. Second, by falling so publicly while Hewlett Packard’s stock continued to climb, we learned that corporate boards may be even less relevant than we thought.
Risk Factors: Dunn’s insistence that she didn’t do anything wrong struck us as, well, a little bit scary. It seemed so far removed from reality. She never seemed to get how frustrating or even insulting her testimony about the pretexting affair was. She gave the impression that no-one had ever challenged her authority. Being in love might mean never having to say you’re sorry. Being the chairman of the board certainly does not.
Should Pattie Cakes be the DealBreaker of the Year? Well, she’s only the second candidate we’ve named (the first was Hank Paulson), so this might be premature. But we invite you to let loose with your inner-most feelings in the comments section below. And if you want to nominate other candidates, please feel free to email us at tips@dealbreaks in Business Todayer.com. (If you can use the format we’ve laid out above, all the better. If it’s a hassle, we’ll take ‘em as we get ‘em.) If we use your nomination, you’ll get a free copy of Winning: The Answers: Confronting 74 of the Toughest Question.
Read More About Patrica Dunn: Patricia Dunn Archives [DealBreaker] Hewlett Packard Archives [DealBreaker] Wikipedia Entry [Wikipedia]
We don’t know whether Pattie Dunn wasn’t offered a bargain or just decided she wasn’t pleaing out. We hope it’s the latter, and that she’s taking the Dick Grasso “clear my name under any costs” road. Because that trial will be totally awesome.
From the Associated Press:
Former Hewlett-Packard Chairwoman Patricia Dunn has pleaded not guilty to four felony identity theft and fraud charges.
It’s alleged that she instigated the company’s ill-fated spying probe into boardroom leaks.
Dunn appeared briefly for her arraignment in Santa Clara County Superior Court.
Dunn was released on her own recognizance after a lawyer entered the plea for her.
The 53-year-old Dunn is one of five people charged in the technology giant’s efforts to unmask board members who discussed company business with reporters.
Investigators used a shady ruse known as “pretexting” to obtain the confidential phone logs of directors, reporters and others to trace the source of the leaks.
[One more quick note: shady ruse? That’s pretty hip lingo for the kids over at the Associated Press. ]
[Oh, wait, another note: We’re thinking of calling Pattie “Cakes” from now on. As part of our new “arbitrary nicknaming policy.” But let us know if you’ve got a better idea.]
Former H-P chairwoman Dunn pleads not guilty [Associated Press]
The Wall Street Journal has given over the lead spot on its editorial page today to Pattie Dunn. Fair enough, since it has run editorials by Dunn critics. And it’s a bit daring of Dunn to go ahead and publish after she’s been indicted on felony counts. In fact, we were so impressed by her unwillingness to take the usual “radio silence” while criminal charges are pending tact, that we found ourselves actually rooting for her while we read the piece.
“Come on, Pattie! You can do it! Convince us that you didn’t do anything wrong here,” we said to our newspaper, causing folks on the subway to give us a little extra room.
But she couldn’t do it. Here’s the gist of her argument: “I asked the right questions of the right people at the right times.” In other words, it’s all somebody else’s fault. She did everything right. This is frustrating because clearly something went badly wrong with the investigation, and no one seems willing to take responsibility.
We won’t go into all the details right now about what seems wrong with her account. But we’ll mention a couple. Here’s one that grabbed us: even though Dunn was actually at the congressional hearings she doesn’t seem to get that people are tired of the circular blame passing that so frustrated the lawmakers. She quotes a “prominent outside attorney” as saying “the process was well done and within legal limits.” But if she means Larry Sonsini, he’s already on record as saying he was relying on Hewlett-Packard’s inside lawyers to make this judgment. So bringing him into it here just confuses matters.
Then there is this whopper: “As a result of the extraordinary negative publicity from these episodes, the board as me to step down as chairman and director.”
There are at least three things wrong with this. First, by calling the press attention to the pretexting scandal “extraordinary negative publicity” she seems to imply that it was unduly negative or that undue attention was paid to the “episodes.” So she still doesn’t get that this was a big deal.
Second, she says the board asked her to step down. Why didn’t she take the initiative when it became clear to everyone else in the world that it was going to be impossible for her to remain chairman?
Third, she says the board asked her to step down because of the publicity from the episodes, rather than the pretexting episodes themselves. This may even be true but it’s not helpful to Hewlett-Packard. It shows that they might still believe that it was all just bad press that was the problem and not the pretexting, privacy invading investigation itself. Or, as Dunn put it in another press account, it was a “disinformation” campaign that toppled her rather than the excesses of the leak investigation she set in motion. The H-P Investigation [Wall Street Journal]