HP faces federal investigation into snooping scandal

Hewlett-Packard is facing a federal investigation into whether the company broke the law when the computer manufacturer obtained directors' and journalists' phone records as part of its attempt to hunt down the source of boardroom leaks.

The attorney general in the company's home state of California has already signalled HP or its contractors could face criminal charges, but the company admitted yesterday the Department of Justice has also joined the widening investigation.

And members of Congress also weighed in to the scandal, demanding that HP hand over documents revealing the name of the company hired to conduct its mole hunt. The powerful House of Representatives energy and commerce committee is examining the ease with which private detectives can access phone records.

Private eyes hired by HP impersonated at least two directors and nine journalists in order to obtain confidential phone records and to discover that George Keyworth, HP's longest-standing board member, had leaked details of boardroom discussions to the press. Such impersonation - known as "pretexting" - is illegal in California, but the law is unclear in many other states.

The debacle has threatened to tear apart HP's board, and yesterday's developments came before directors convened for a second day of emergency meetings to discuss the future of the chairman, Patricia Dunn, who oversaw the leak inquiry.

HP said in a statement yesterday: "As reported on 6 September, we recently have been informally contacted by the attorney general of the State of California requesting information concerning the processes employed in an investigation into possible sources of leaks of HP confidential information. In addition, since then, we have been informally contacted by the United States attorney's office for the northern district of California requesting information similar to that sought by the California attorney general. We are cooperating fully with these inquiries."

Tom Perkins, another long-standing board member, quit in anger in May when his friend Mr Keyworth was asked to resign. Over the weekend, he called for Ms Dunn to stand down to restore boardroom harmony.

Ms Dunn insists neither she nor the rest of the board knew that underhand tactics had been used, but has said she would resign if she lost the confidence of her fellow directors.

An emergency board meeting broke up on Sunday without resolution and reconvened yesterday evening. One plan understood to be under consideration calls for Ms Dunn and Mr Keyworth to step down, with Mr Hurd adding the chairmanship to his responsibilities as chief executive. The roles of chairman and chief executive were split 18 months ago, when HP fired the previous incumbent, Carly Fiorina.