Fiorina & Dunn: On the Offensive with 60 Minutes, Corporate Investigative Methods Under New Scrutiny

Since first posting a couple of weeks ago about the HP scandal after CEO Mark Hurd finally gave some voice to concerns about his involvement, I was astonished by the deluge of private emails I received about the subject and implications for the CI field. What was even more astonishing was the utter lack of commentary here, as comments to the original post. With that, I urge readers to weigh in with their opinions and let their voice be heard, particularly after 60 Minutes' piece last night.

CBS's 60 Minutes (video still available) Sunday night featured the dragon lady duo of Silicon Valley appearing in separate interviews going on the offensive in the wake of indictments by California Attorney General Bill Lockyer of former Hewlett-Packard chairman of the board, Patricia Dunn.

Of course, all this was happening even while Carly Fiorina's new book takes credit for the reforms that have recently brought HP market success even during the ethics scandal and espionage crisis while complaining of HP's good ol' boys and their fight to ruin America's most powerful female CEO.

Following on the heels of the indictments last week the twin interviews were telling in showing two powerful women brought low by the same company and a culture of hubris that has yielded not just ruined fortunes but reputations with it. Slate.com's Today's Papers had a nice rundown on the indictments last Thursday excerpted below:

The Hewlett-Packard case, already "one of the nation's most embarrassing corporate scandals in years," writes the WSJ, is "likely to have implications that go far beyond the particulars of the case." To recap the story so far: Dunn was angry that someone was blabbing to news organizationsincluding the WSJabout internal boardroom strife. She hired private investigators to conduct two separate investigations, which eventually led to the probable leaker, a board member. But another board member resigned in protest when he found out about the shady methods investigators had used to obtain his personal phone records. Whether those phone records were obtained illegallyand whether Dunn knew itwill be the central question in the criminal case. There are also allegations that Hewlett-Packard's former chief ethics lawyer (!), also indicted yesterday, had journalists and board members placed under various kinds of electronic and physical surveillance.

 

The big news for investors, however, was that California's attorney general, who brought the charges, appeared to indicate that the company's respected chief executive, Mark Hurd, is legally in the clear. On that news, the company's share price rose to a six-year high, the LAT notes.

 

Dunn, who is not a lawyer, is expected to argue that she was just following a company attorney's advice when it came to the legality of the search. Several legal experts said that prosecutors might have a hard time proving she intended to break the law. Dunn's lawyer said: "These charges are being brought against the wrong person at the wrong time and for the wrong reasons." The papers all note that Dunn was recently diagnosed with a recurrence of ovarian cancer and begins chemotherapy at the end of the week. "Her illness has no impact on her culpability," said the attorney general, who just happens to be campaigning for a higher statewide office.

 

Meanwhile, in a nice piece of timing, the NYT reports that former Hewlett-Packard CEO Carly Fiorina has a new book out, in which she calls company board members "amateurish and immature."

First, Carly's new book, which pulls no punches according to the summary excerpted below and is shaping up as a "nice girls finish last" memoir of HP's good ol' boys' club:

The memoir of fallen Hewlett-Packard Co. leader Carly Fiorina, once America's most powerful woman chief executive, paints an unsparing picture of the internal power struggles and gender politics that prefigured America's most public corporate boardroom scandal.

 

"Tough Choices," due to go on sale next week, is Fiorina's long-awaited return to the public arena after she went silent in February 2005 following her sudden firing as chairman and CEO of Hewlett-Packard, the computer and printer maker.

 

Publication of the much-anticipated memoir coincides with the filing of felony charges by California officials on Wednesday against former HP Chairman Patricia Dunn, who helped drive Fiorina out of HP and took over as chairman.

 

Dunn and four others have been charged with felonies and are accused of spying on journalists and HP directors in one of the year's biggest corporate scandals.

 

Running through her narrative of becoming the first outsider to run Silicon Valley's original high-tech company are fresh details of the intense infighting and embarrassing press leaks that set the stage for later corporate witch hunts.

 

"Beyond the leak, there was much about the board's dynamics that was disturbing," Fiorina writes in a book meant to appeal to the women's self-help crowd. Chapter headings include: "I Can and I Will," "Saving my Tears" and "Owning my Soul.

 

The book breaks with the anodyne genre of corporate autobiography that is typically long on management philosophy and short on personal revelation. She pulls no punches criticizing former colleagues, board members, and underlings.

 

The fact of being a woman leader in a male-dominated technology culture figured heavily in these spats, she writes of her tenure at HP from 1999 until February of last year. Dunn emerged as HP's new chairman and the public face of its board in the weeks leading up to hiring of new CEO Mark Hurd.

 

CEO VERSUS GOOD OLD BOYS

 

Fiorina draws a picture of constant infighting pitting what amounted to a Silicon Valley male establishment against women executiveswith some male allieswhose world view came from their corporate experiences outside the high-tech world.

 

As she tells it, she faced off against the modern equivalent of a "good ol' boys" network who bonded over technology rather than more traditional male pursuits.

 

Among them were board members Tom Perkins, a legendary venture capitalist, and Jay Keyworth, President Ronald Reagan's science and technology advisorboth of whom were later identified as leaking HP board discussions to the press.

 

They were "big-picture guys" who "loved the minutiae of technology" but "were impatient with the details of what was necessary to actually get something done," in her words. "Like many technologists, they recognized and liked their own kind, but they weren't particularly perceptive about, appreciative of, or interested in people who were different," she writes.

 

In an extensive discussion of the dynamics of the HP board, Fiorina bemoans the shift in power after 2003 and the retirement of a set of board members with extensive experience in corporate operationsmen like Phil Condit of Boeing and former phone executive Sam Ginnwho were also her allies.

 

"They knew that a board cannot operate a company. They knew that a small group of individuals can sometimes go off track. They provided ballast and perspective to the board's discussions," Fiorina recollects.

 

She describes a proposal by opponents to split HP in twoseparating its corporate enterprise products from its consumer businessesas an unnecessary intrusion by the board on her role as CEO in running the company. "From my perspective, their suggestions came out of left field and were half-baked."

 

PRESS LEAKS DRIVE HER OUT

 

Not only had revelations by board opponents of her plan to merge Compaq Computer into HP nearly derailed that major deal in 2002, but leaks in early 2005 about the possible split-up of the company set in motion her firing two weeks later.

 

In response to those leaks, board member Larry Babio, vice chairman of Verizon Communications, proposed that the whole HP board resign and Fiorina choose a new set of directors.

 

"No one argued" when she proposed in an emergency Saturday morning board meeting that an internal probe seek out the source of leaks to the Wall Street Journal, Fiorina writes.

 

In this initial probe, Perkins disclosed he had been one source of the leaks. Dunn, whose current criminal charges stem from a follow-on leak probe a year later, was on vacation in Bali and missed the call that approved the probe.

 

Fiorina writes: "I thought this could be a useful wake-up call to several board members who were not as smart as they thought they were.

 

"(It) turns out I wasn't as smart as I needed to be," she writes bitterly. "Somehow, at some point during the next two weeks, certain board members would decide to fire me."

All this has some profound implications for those of us in the CI world. As the stories excerpted below illustrate.

The "don't ask, don't tell" approach to hiring outside investigators no longer applies as companies large and small button down their contractors on methodology, as this InformationWeek.com piece talks about:

With Hewlett-Packard insiders and contractors facing fraud and conspiracy charges, a spotlight is being shone on the shady world of corporate intelligence.

 

A month after HP principals admitted to conducting a boardroom leak investigation that involved spying, accessing phone and fax records using false pretenses, and running a sting operation on a reporter, former HP chairwoman Patricia Dunn and four others were charged last week with fraud and conspiracy. The California attorney general's office arranged for Dunn and former HP ethics chief Kevin Hunsaker to surrender. Dunn is to be arraigned on Nov. 17, Hunsaker on Dec. 6.

 

Also charged with felonies were security contractor Ron DeLia and investigators Matthew DePante and Bryan Wagner. DeLia and Wagner were expected to turn themselves in last week. At press time, Attorney General Bill Lockyer's office had not made contact with DePante. All five face charges for allegedly engaging in fraudulent wire communications, wrongful use of computer data, identity theft, and conspiracy to commit those three crimes. No charges have been brought against HP CEO Mark Hurd, named chairman on Sept. 22 when Dunn stepped down.

 

A federal investigation of HP's practices continues out of the U.S. Attorney's Office, as do probes by the FBI, FCC, Federal Trade Commission, and Securities and Exchange Commission.

 

Forbidden Fruit

 

Security and intelligence experts say the temptation can be great for executives to authorize the use of Web bugs, miniscule eavesdropping devices, and other newfangled technologies. They give companies a sense of distance and anonymity. Using tracking software seems less cloak-and-dagger than breaking into someone's office and tearing through desk drawers.

 

	One awful month for the ex-chairwoman Photo by Justin Sullivan/Getty Images

"It amounts to an extraordinary amount of change in our industry," says Michael Hershman, president of the Fairfax Group, an investigative firm that largely deals in theft of proprietary information, embezzlement, and computer sabotage. Most investigators aren't sifting through reams of legal papers crammed in the back rooms of courthouses. Instead, they're searching online databases from around the world. And they employ computer forensics, accounting, legal, and insurance experts as part of what have become information consultancies.

 

To track employees, some companies rely on GPS technology installed in company cars and on company-issued cell phones, says Howard Schmidt, a former White House security adviser and now CEO of R&H Security Consulting. And "phone home" software installed on laptops will send out a notification of a machine's location every time it's booted up.

 

Legal investigative tactics? Most of the time. Ethical? That gets a little murkier, but as long as it's company-owned equipment and networks, employees can expect their communications to be monitored.

 

HP's investigators went a couple of steps over the line, concocting the persona of a disgruntled HP senior manager e-mailing insider information to a reporter. Attached were tracers, otherwise known as Web bots. If the reporter forwarded the messages to her secret contact on the company's board, the tracer was set up to send his IP address back to investigators.

 

Ken Springer, a 12-year FBI veteran and now president of Corporate Resolutions, an investigative firm, calls these kinds of tactics "forbidden fruit." "It's there, but you can't take it," he says. "You have to make sure that what you do stands up to scrutiny."

 

Ever since news of the HP scandal broke, clients have called Springer to make sure their investigations are legal, even asking for written assurances. "Before, people assumed you were doing it legally," he says, "but now they're double-checking."

 

And HP's outside contractors aren't escaping untouched either, as eWeek.com describes:

Facing identical charges are Kevin Hunsaker, a former HP lawyer and ethics officer, and three people hired by HP as part of the investigation: Ron DeLia, managing director of Boston-based Security Outsourcing Solutions, an outside firm brought in by HP to conduct the investigation; Matthew DePante, manager of information broker Action Research Group, in Melbourne, Fla.; and Bryan Wagner, an ARG employee.

 

Each felony count carries a maximum three-year prison sentence and fines of up to $10,000. California Attorney General Bill Lockyer said in a statement that his office is making arrangements with lawyers for Dunn and Hunsaker to surrender voluntarily, and that it's working to bring the other threeall of whom live outside of Californiaback to the state to stand trial.

 

"One of our state's most venerable corporate institutions lost its way as its board sought to find out who leaked confidential company information to the press," Lockyer said. "In this misguided effort, people inside and outside of HP violated privacy rights and broke state law."

 

HP, of Palo Alto, Calif., first initiated the investigation into news leaks in early 2005. Dunn revived it again in earlier 2006 after more leaks to the media.

 

One of the methods used by HP's hired investigators was "pretexting," in which they used the Social Security numbers and other personal information of board members and reporters to trick telephone companies into giving them private telephone records. Investigators also reportedly followed directors, journalists and family members, and at one point considered planting spies in newsrooms.

 

In all, investigators used fraudulent information to obtain confidential phone records of 12 people, including board members and their families and journalists and their families, according to Lockyer.

 

The five are also alleged to have obtained personal identifying informationsuch as names, phone numbers and Social Security numbersfrom 13 people, including board members, journalists and relatives.

 

The investigation eventually identified board member George Keyworth as the person speaking to the media, but has become the source of scandal since HP first filed documents with the federal Securities and Exchange Commission in early September noting the use of pretexting.

Dunn, Keyworth and another board member, Tom Perkins, all have resigned from the boardPerkins over concerns about the investigation. In addition, several HP employees also have lost their jobs, including General Counsel Ann Baskins.

 

During the hearings in Washington, Dunn apologized for the investigation but refused to take responsibility, saying she was unaware of the tactics being used by the investigators.

 

The charges brought by Lockyer disputed that. In a statement, the AG's office said the complaint and supporting evidence "detail how Dunn and Hunsaker knew the outside investigators obtained phone records through false pretenses. After acquiring that knowledge ' both Dunn and Hunsaker facilitated the continued use of the illegal means to obtain phone records, making both culpable for the crimes."

 

In one example, Lockyer said, Dunn in April 2005 gave DeLia the home, office and cell phone numbers of HP board members. Two months later, DeLia briefed Dunn and Baskins, at which time Dunn learned that the phone records were obtained under false pretenses. In January 2006, Dunnaware of the means used to gain the telephone recordsrenewed the investigation and subsequently received regular briefings from DeLia.

 

Hunsaker became aware of the investigators' tactics in January 2006, and still gave them the home, office and cell numbers of HP employees, according to the attorney general's office.

 

Mark Hurd, HP's chairman, president and CEO, said he is ultimately responsible for what happened, though he, too, has said he was unaware of the details of the investigation until recently. Hurd has vowed to ensure that nothing like this happens again.

Reprinted in eWeek also, Reuters interviewed a few "experts" to see if such investigative techniques are more commonplace than anybody cares to admit:

To think Hewlett-Packard, the world's second-largest computer company, is alone in pursuing aggressive internal investigations would be naive, say HP's former chairman, experts and lawyers; they do it all the time.

 

But do they routinely turn to such skulduggery as rifling through garbage? Impersonate someone to get their phone records, known as pretexting? Or send fake e-mails embedded with tracing technology?

 

Perhaps not the companies themselves, experts said, but the investigators they hire do use those methods. And, in light of HP's full-blown scandal into its board leak investigation, that gives big companies plenty of reasons to be skittish.

 

"Corporate America is worried and should be worried," said Jamie Wareham, global chairman of the litigation department at law firm Paul, Hastings, Janofsky & Walker LLP. "Do you think these guys in the business of pretexting only have one client and that's HP? I don't think so."

 

HP had turned parts of the leak probe over to Security Outsourcing Solutions, a small Boston private investigations firm, which in turn used subcontractors to investigate.

 

Wareham said he knows of "some large companies that are worried some of their investigative agencies use these sorts of tactics," though he declined to name them. Some companies he knows are conducting audits of their private investigators in light of HP's experience, he said.

 

What began as an effort under prior Chief Executive Carly Fiorina in what lawyers say appears to have been an aboveboard effort to find the source of boardroom leaks devolved into a scandal that has claimed former HP Chairman Patricia Dunn, former general counsel Ann Baskins, and several other HP executives.

 

California's attorney general on Wednesday filed felony charges against Dunn and four others for spying on journalists, HP employees and the company's board of directors. HP is also under investigation by the U.S. Securities and Exchange Commission and other regulators for the investigative tactics used.

 

Attorney General Bill Lockyer's office said it investigated at least five other cases involving potentially illegal use of database brokers, but has declined to give details.

 

Companies routinely conduct investigations, but their number has grown since the Sarbanes-Oxley Act of 2002 was signed in to law in July of that year. That wide-ranging law established new or enhanced standards for disclosing financial and accounting details for publicly traded U.S. companies.

 

"Companies now more than ever, post Sarbanes-Oxley, are routinely doing internal investigations," said William Keane, a partner at the law firm Farella Braun+Martel, noting that they typically cover issues of securities or accounting fraud, employment and discrimination matters as well as worker theft.

 

"I would say if there are investigations going on that include obtaining private personal phone records, they would be the exception rather than the rule," Keane said.

 

Dunn's involvement in HP's leak investigation in 2005 and 2006 prompted her resignation. She testified before U.S. Congress that corporate investigations are the norm, rather than the exception. And many may involve unsavory tactics, she offered.

 

"The fact is that I believe that these methods may, in fact, be quite common not just at Hewlett-Packard, but at companies around the country," Dunn said.

 

And although HP is now the poster child for corporate investigations gone "rogue," as HP's current Chief Executive Mark Hurd testified before the same congressional panel, it may not be lonely for long.

 

"This is kind of like the first options-backdating case," lawyer Wareham said, likening HP's leak scandal to the some 100 companies whose stock option grant practices are under scrutiny by regulators. "It's not the last one you're going to be reading about."

Lest we ever forget CIO Magazine resurrected the ghost of the P&G/Unilever scandal in asking when it might be okay for a company to lie in order to protect itself competitively? Great question and one we should fundamentally address in order for us to seriously be called CI professionals.

For the October issue of CSO magazine, I wrote a mini-profile of a company called Mitchell & Ness, which makes vintage sports jerseys that sell for hundreds of dollars. The company has a huge problem with counterfeit and diverted goodsso much so that it recently hired a consultant to visit some of its factories in Korea posing as a distributor who wanted to purchase any extra shirts the factory could produce.

 

You might call what the investigator did lying. You might call it going undercover. Or you might also call it what has become the latest dirty word in business: pretexting.

 

Pretexting has become a dirty word, of course, because of the revelation that Hewlett-Packard took it, along with other investigative techniques, way too far in trying to find the source of boardroom leaks. An outside attorney brought in by HP is examining four questionable methods in particular: obtaining telephone call and fax records by pretending to be individuals under investigation; using Social Security numbers to obtain those records; sending e-mail with a tracing mechanism as an attachment; and conducting physical surveillance of individuals, including a board member who was trailed at home in California and on a trip to Colorado.

 

HP screwed up this investigation and is now suffering the consequences. Several individuals have lost their jobs, among them Tony Gentilucci, a security manager who allegedly gave out the Social Security number of an HP employee. But another consequence may be a chilling effect on people who know how to (and bother to) conduct a by-the-book, ethical, effective investigation. Already, companies may be leery of doing a thorough investigation, for fear of being tainted by even remote association with HP's dirty tricks.

 

One longer-term outcome could be a notification law, in which persons under investigation are given warning. Also likely to come under increased scrutinyand for good reasonis the use of contractors and subcontractors to handle the less savory aspects of an investigation. But the biggest concern we're hearing from CSOs is that pretexting as a wholein other words, any form of misrepresentationcould get thrown under the bus and made illegal.

 

Pretexting is a technique in every investigator's toolbox, and it involves, at its very essence, lying. Lying, by itself, is not illegal. As Richard Horowitz, a New York attorney who helped formulate guidelines for a trade group of competitive intelligence professionals, once told me: It's not illegal to lie and say to someone, 'Yes, your daughter looks beautiful on her wedding day.' Even if she doesn't. We call that a white lie.

 

At some point, however, a white lieone that most people consider acceptable, like going into your factories pretending to be someone else perhapscrosses the line into a gray area that many people consider unacceptablelike conducting a secret investigation that involves a stakeout at a board member's house. And at some further point still, a lie crosses from the gray area to a black onelike pretending to be a very specific person, with a very specific Social Security number, who wants records of his recent phone calls. This black area consists of behavior that is illegal. In violation of privacy, wire-tapping or employee protection laws. Fraud.

 

Perhaps nowhere in the business world is the gray area, ethics, larger than in matters of investigations. Just think back to the infamous P&G dumpster diving case in 2001. The consumer goods company paid Unilever $10 million after being caught conducting an investigation that involved going through its rival's trashone of several techniques that were not exactly illegal but that violated internal P&G policies, as well as the boundaries of what many people consider ethical business practices.

 

Clearly, the investigation at HP crossed the line into the gray, if not black. Mark Hurd, HP's chief executive, acknowledged as much last week in his first comments to the press since the scandal broke. Some of the findings about the investigation are very disturbing to me, he said, and do not reflect the values of HP.

 

But the question before us now is not only to what extent the HP investigation crossed into gray and black areas. It's to what extent our current laws have created a bigger gray zone than we as a society are comfortable with. Our challenge going forward will be to carefully reshape and limit that gray zone, without creating a world in which a company like Mitchell & Ness can't hire private investigators to see what's really going on in its factories.

Finally, in hopes to spark some commentary here, I leave you with CBS's take on Pattie Dunn's interview for 60 Minutes - saying that all companies have intrusive investigations but that this scandal has been manufactured by Tom Perkins to get her off the board:

Patricia Dunn: I Am Innocent

 

PALO ALTO, Calif., Oct. 8, 2006

---

(CBS) The Hewlett-Packard board of directors was a leaky ship. Secret board deliberations were ending up in the press left and right, and it was decided something had to be done.

That something is arguably the most famous leak investigation since Watergate, and because of it Pattie Dunn, who was chairman of the HP board of directors, now faces criminal charges, and could go to jail.

As correspondent Lesley Stahl reports, the charges stem from the use of something called pretexting, where phone records are retrieved by subterfuge and pretense - where someone calls the phone company and pretends to be someone else in order to obtain the records.

The tactic was apparently used to retrieve the phone records not only of HP board members but of reporters as well. Social security numbers were also obtained, board members and journalists were followed, and there was even discussion of planting spies in newsrooms.

On Thursday, Pattie Dunn was booked on four felony counts in connection with the investigation.

---

Pattie Dunn, 53, is a former business CEO who just two weeks ago was inducted into the Bay Area Business Hall of Fame. She talked to 60 Minutes about what happened at HP only hours after the criminal charges against her were announced.

"Maybe someone will come in here while we're talking and put handcuffs on me. I don't know," Dunn tells Stahl.

"Let me ask you the obvious question that I think every lawyer who's watching this is asking himself or herself. Why are you giving us an interview right after you've been indicted? It's pretty unusual," Stahl asks.

"So my lawyer tells me," Dunn replies, laughing.

But her lawyer did approve of the interview. "I have a story to tell. I'm innocent. I need people to understand what happened. And I'm glad to have the chance to do it," Dunn says.

Her story involves the investigation into who from the board was leaking confidential information to the press, about corporate strategy, HP's interest in buying another tech company, even deliberations over who they would hire as CEO.

"The idea that the most sensitive discussions of the board would end up on the front page of the Wall Street Journal was destructive. It destroyed the trust between people and if they don't trust each other," Dunn says, "they can't function as a board."

Dunn says a majority of the board asked her to initiate a leak inquiry, which soon ran amok and has made her the public face of one of corporate America's biggest scandals.

She accepts no responsibility, admits no wrong. At the heart of the case is: what did Pattie Dunn know about the pretexting, or the use of pretenses to get phone records. Evidence includes a conference call, apparently with Dunn, during which pretexting was allegedly discussed, and notes of an interview with Dunn about the case.

"Quote, 'Dunn thinks it is probable that she was told in some circumstances they may need to use false pretenses,'" Stahl states.

"I refute those notes. I was never given a chance to review them," Dunn says. "This is not a deposition; this was not recorded. If it's going to be used as evidence against me, somebody needs to take my deposition."

And perhaps the most serious charge against her involves passing along personal information to the investigators to enable the pretexting.

"The complaint specifically mentions that you gave the investigators the home phone numbers of your fellow board members," Stahl says.

"I don't remember giving the investigators the home phone numbers of my fellow board members. But those are not hard to get within HP. They're public information within the board infrastructure," Dunn says.

---

At a recent news conference an HP lawyer said Dunn had instigated and closely monitored the probe, and CEO Mark Hurd also weighed in.

"And he termed the tactics 'disturbing.' He's the one who pointed the finger at you," Stahl says.

"Well, that's a mischaracterization of my role," Dunn replies.

Asked why he would do that, Dunn says, "You'd have to ask him, Lesley. I'm not going to speculate on other people's motivations here."

She maintains that at every step of the way she relied on senior HP lawyers to ensure everything was done legally.

"Isn't it just wrong - isn't it just ethically wrong, forget whether it's legal or not, to go in and get people's phone records?" Stahl asks.

"People who sit on public company boards have a very different attitude about this than probably the general public. First of all, you give up a lot of privacy when you go onto a board. You have to make all kinds of declarations," Dunn says. "Your life is a much more open book when you have this kind of a public trust."

"But what about the reporters? It wasn't just board members. It was reporters as well," Stahl remarks.

"That was just wrong. That was wrong. I found out about that on September 6th, 2006," Dunn says. "The idea that I supervised, orchestrated, approved all of the ways in which this investigation occurred is just a complete myth. It's a falsehood. It's a damaging lie."

The focus on her started, she says, after the investigation identified board member and nuclear physicist Jay Keyworth as the source of many of the leaks. Another board member, Tom Perkins, she says, wanted to keep that secret from the full board.

"Well, they were best friends," Dunn says. "They were allies on the board. And I think he thought it was a possibility that the board would say the leaker should resign. He just didn't want that outcome."

"I don't understand how you have an investigation and there's even a discussion of not revealing who the culprit is?" Stahl asks.

"What Tom believed was that we would simply tell the leaker never to do it again. Then, we would inform the board that we had identified the leaker, that he had confessed, and agreed he would never do it again. Next item on the agenda," Dunn says.

60 Minutes couldn't reach Tom Perkins since he is currently out to sea on his new boat, said to be the largest and most expensive private sailboat ever built. He's a founding partner of the venture capital firm Kleiner Perkins, that has bankrolled AOL, Google and Amazon, among others. Dunn says, he's a guy who definitely knows how to get his way.

But he couldn't get his way with Pattie Dunn. She refused to keep that Keyworth was the leaker a secret. The board asked Keyworth to resign - and in a peek behind-the-scenes at how things can explode on a board, Dunn says Perkins walked out in a huff.

"He turned to me sitting nearby and pointed at me and said, 'You betrayed me.' He said that several times. 'You betrayed me, Pattie. You said that we would handle this off-line and a good man is being ruined as a result.' And, he snapped his brief case shut and stormed out of the room and said, 'I resign.' And, one of the other directors said, 'Can we accept his resignation?' The general counsel said yes. He put the motion on the table. It was seconded and passed within seconds," Dunn says.

"So he drove off and ended up going onto his mega yacht in the Mediterranean. And I suspect he thought over the ensuing days that it was just unacceptable that he was off the board, Jay was going to be off the board, and I was still chairman," she adds.

After that, Perkins blew the whistle on HP's leak investigation and she says he began a campaign of deceit about her.

"It was a disinformation, a classic disinformation campaign," Dunn says. He set the mindset for basically everything that's believed about this right now."

---

She says he sent out an e-mail disparaging her, and influenced the media.

"The Newsweek cover that said 'The Boss,' which I wasn't, 'Who Spied,' which I didn't, 'On Her Board,' is really now fixed in the minds of the public, as a result of a campaign to put it there," Dunn says.

She even accuses him of bringing his campaign against her to law enforcement.

"He and his team went to see various agencies of government and law enforcement agencies," Dunn says.

"About you?" Stahl asks.

"That's what I am told, that's exactly what they did," Dunn replies.

A spokesman for Perkins confirmed that indeed, he did go to the SEC, FTC, the Justice Department and the California attorney general to complain about the tactics used in the leak investigation.

"If you have enough money and you're willing to spend enough, you can buy and sell somebody's reputation," Dunn says.

Asked whether she's charging that that is what he did, Dunn says, "That is what he did."

"You're saying, if I understand you, that he, Tom Perkins, set out to get you and that," Stahl began asking.

"He wanted me off the board. This was to get me off the board. I don't know if he ever thought through the consequences that would go beyond my getting off the board," Dunn says.

"Well, you said he went to law enforcement. That takes it another step," Stahl remarks.

"It does take it another step. Here I am today with an indictment over my head," Dunn replies.

"Are you saying he's responsible for that?" Stahl asks.

"Well, I don't think I'd be sitting here today if Tom had handled this differently," Dunn says.

60 Minutes has learned that Perkins made several settlement demands on HP: that the company pay his legal fees, that Pattie Dunn be forced to resign; and that the company not disparage him or Jay Keyworth.

This is what CEO Mark Hurd said on September 12th in a news release:

"He said, 'Jay Keyworth leaves the board with our best wishes and gratitude,'" Stahl reads from the release. "Here's what I have trouble understanding. Everybody says leaks are bad. The leaker is identified and now there's a settlement with him."

"Uh-huh. Go figure," Dunn replies, laughing.

Asked if she understands this, Dunn says, "Well, at that point I think the company thought it was in the best interest of HP to get Tom off its back, so to speak."

Pattie Dunn appeared in a San Jose courtroom on Thursday.

She's not just fighting for her reputation, she's also fighting for her life. This has all happened as she battles stage IV ovarian cancer.

Dunn was preparing to start a full round of chemotherapy, severe chemotherapy, on Friday morning. "8:45 a.m.," she told Stahl on Wednesday.

"And you're charged with this. It's just all piling on you at once. It's just all piling on you at once. And you're so strong," Stahl says.

"What's the alternative?" asks Dunn.

"Well, breaking down, getting in the back of the closet and sitting there. I can think of lots of things that other people might do," Stahl remarks.

"Oh, the Golden Gate Bridge is always out there," Dunn jokes, laughing. "It's not going away. But I mean, you just have to fight back."

"Do you think your illness has made you - what's the word? Philosophical?" Stahl asks.

"Definitely," Dunn answers. "Having a criminal indictment is the last thing I ever expected in my entire life. But if I hadn't had four diagnoses of cancer, I would probably think it was the worst thing that could ever happen to anyone. And I know it's not."

Dunn says she is innocent of the charges she and four others connected to the case are facing: using false pretenses to obtain confidential information from a public utility, unauthorized access of computer data, identity theft and conspiracy. She admits she's not sure what's next.

"I know the complaint has been filed and I know that I am going to be following a path to defend myself," she tells Stahl. "But at this instant, it's just a couple hours since [the prosecutor] made his announcement."

"Maybe someone will come in here while we're talking and put handcuffs on me. I don't know," says Dunn.