Hewlett-Packard Co. will pay $14.5 million and shift its internal ethics policies to close the door on its investigation into leaks from its board of directors.

The company has entered into an agreement with the California Attorney General to resolve civil claims brought by the investigation, which involve criminal offenses related to the use of false pretenses to access individuals' phone records during HP’s probe of boardroom leaks to the media and saw arrest warrants for former chairwoman Patricia Dunn and other HP executives in October.

The agreement, filed Thursday in Santa Clara County Superior Court, calls for HP to pay $14.5 million and implement several measures designed to ensure that its internal investigations are conducted in accordance with California law.

"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 CEO, said in a statement.

HP noted that there was no finding of liability against it 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.

Specifically, the agreement will see $13.5 million of HP's payment 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’s internal processes and controls will be maintained for five years and include the designation of an independent director to review and report on HP's compliance with legal and ethical requirements related to the conduct of investigations to the board; the appointment of a chief ethics and compliance officer, whom HP named in October; the retention of an expert in the field of investigative practices; the expansion of the role of HP's chief privacy officer to include review of HP's investigation practices; the expansion of HP's employee and vendor codes to ensure that they include legal and ethical standards applicable to the conduct of investigations; the creation of a Compliance Council within HP; and the redesign of HP's annual training requirement to ensure that business ethics plays a more prominent role, and the provision of additional training to employees engaged in the conduct of investigations for HP.

HP’s board has designated its newest member, G. Kennedy Thompson, who serves as CEO 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.

By: DocMemory
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