Sting jobs, employee surveillance and a new work environment
Sep 25, 2006
It is straight out of a Tom Clancy or Fredrick Forsyth novel. Global IT major Hewlett Packard's (HP) paranoid sting job to find and plug the leak of corporate information, from its board directors to the media using lies, impersonation and electronic surveillance has rocked the business community.
The issue has snowballed into a major controversy and triggered a federal investigation and Congressional hearings in the US. It has also led to the resignation of chairman Patricia C. Dunn over the weekend. More importantly, it has raised fundamental issues of privacy and exposed the tendency of large corporations to believe their financial muscle puts them above the law.
The story is simple. Sometime in 2005, Chairman Patricia Dunn, was angered by a report that published details of a meeting attended by board-members only. Determined to find the source of the leak, she ordered an investigation that seems to have transgressed ethical borders and expanded into a dubious sting operation that involved spying on seven directors, nine journalists, two employees and family members of those targeted individuals. The unraveling story has still not answered all the questions thrown up by the disclosures, but it has triggered several important debates.
What makes this story more bizarre is that Hewlett-Packard stood second on Business Ethics magazine's 100 best corporate citizens for 2006 and its ‘ethics officer’ was an active part of the unethical investigation that included 'pretexting', which we discover is a nicer-sounding word for impersonation, in order to obtain phone records of HP’s victims.
All this drama is rather astonishing for us in India where even confidential and 'top secret' government documents are routinely leaked. In fact, much of big business is part of a little cottage industry that pays for the photocopying and leak of sensitive documents, cabinet notes and minutes of secret meetings for a regular fee. In the early 1990s I remember Rebecca Mark of the ill-fated Enron being outraged at our easy access to 'secret' documents pertaining to her negotiations; I remember telling her that if she wants to do business in India, she will simply have to get used to the fact that there are almost no secrets, because everything leaks out. Whether it gets into the public domain or not is another matter - that depends on the clout that companies wield over the media.
Since board members in India, especially independent directors, are selected very carefully there are rarely any leaks from closed door meetings even when companies make dubious corporate decisions. On the other hand, leak of inside information to capital market operators remains rampant despite insider trading regulations. This is encouraged by the fact that the market regulator seldom investigates fairly obvious price flare-ups or slumps that precede major corporate developments.
From the Indian perspective, the goings-on at HP seem to reveal a highly independent board which did not operate like a closed buddy-group. Consider the facts. First, one or more board members were actually talking to the media (as opposed to leaking information to a market operator to make some money) and expressing views that were probably contrary to those of the Chairman. This is underlined by the fact that one director even resigned in protest of the sting operation. If the chairman had more control over board members — as is true in most Indian companies — one of the directors would have been persuaded to skillfully flush out the source of the media leaks, instead of mounting a dangerous sting operation. Indian companies have even been known to use ‘friendly journalists’ to expose disgruntled employees.
Another interesting aspect of the controversy is that HP seems set to get away with sacrificing Patricia C.Dunn and allowing Chief Executive Mark Hurd to take over. It seems rather strange that such an elaborate surveillance could have been ordered without Hurd being a party to it or at least aware of what was going on. But the strange justice that prevails in the US seems set to allow HP to get away with this move, so long as one a big head has rolled and some sundry officials sacked. In fact, the HP stock price rose after the announcement of Hurd’s takeover. So while the independence of the board directors looked good, Mark Hurd’s ignorance of the sting operation smacks of poor corporate governance and widespread distrust and secretiveness at the top.
The third aspect to the HP story is the impunity with which the company encroached on the privacy of its employees, directors and outsiders (journalists). A part of the HP action involved creation of a fictitious, disgruntled employee and have him win the confidence of CNET journalist Dawn Kawamoto by leaking inside information to her. The idea was to then send here an email attachment with ‘tracer software’ that would allow HP’s surveillance to track who she forwarded the email to in order to verify the information. This was in addition to accessing her phone records (the phone itself was in her husband’s name) through impersonation.
This is a dangerous new trend that probably has not received enough attention in India, despite our renowned IT prowess. According to media reports, an electronic monitoring and surveillance survey conducted by the American Management Association showed that 76 per cent of companies watch employees' Web surfing and half of them store and review e-mail messages and computer files. The same report says that the National Workrights Institute in Princeton believes that electronic monitoring occurred in 92 per cent of all workplaces.
Apparently, several nations are already operating in an Orwellian system where ‘monitoring employees’ is apparently “a regular business practice” and monitoring citizens is also acceptable due to security concerns. If we are still a small distance away from this strange new world, it is probably because of high technology costs and absence of trained manpower that can be spared to monitor employees.