Technology

Defending Dunn in Public


Editor's Note: The following article reflects corrections made after the story's original publication on Sept. 28. In his Sept. 11 presentation to Hewlett-Packard's board of directors, Jeffrey Sonnenfeld urged the board to conduct an independent investigation before "throwing bodies under the bus," a remark that some sources may have interpreted as a defense of Chairman Patricia Dunn. CEO Mark Hurd, at Dunn's behest, made the call inviting Sonnenfeld to present to the board. Sonnenfeld disclosed his role as an unpaid presenter to the board to CNBC on Sept. 11 and Sept. 14.

Hewlett-Packard's drama, as most tragedies, has a chorus. In this case, it's a clutch of corporate governance experts opining on who was right, what went wrong, and how the company could have handled things better.

Chief among the commentators is Yale School of Management Associate Dean Jeffrey Sonnenfeld, who has publicly defended former HP chairman Patricia Dunn and her investigation into leaks of corporate information to the news media.

But while Sonnenfeld has been quoted as an impartial analyst, he did in fact participate in HP's pivotal Sept. 10-11 board telephone meetings during which directors decided to keep Dunn on the board and, for the time being, let her stay on as chairman. At that meeting, Sonnenfeld told the board to conduct an independent investigation before "throwing bodies under the bus," a remark that some sources may have interpreted as a defense of Chairman Dunn.

"SCORCHING CRITIC" Sonnenfeld says he was asked to speak to the directors by CEO Mark Hurd "at the invitation of the full board." Sources close to Hewlett-Packard (HPQ) say he was brought into the meeting at Dunn's request. Hewlett-Packard spokesman Michael Moeller declined to comment. Former Securities and Exchange Commission chairman Richard Breeden, who was also invited by Dunn, made a presentation to the board as well.

Since the meeting, Sonnenfeld has continued to defend Dunn, sometimes without disclosing his role in the HP meeting. He defends his lack of disclosure, saying he was not paid by Dunn or HP for his presentation. "There was no pay or personal relationships involved. I don't have a history with anyone in this company, except as a scorching critic," Sonnenfeld says. "I've not been partisan in this situation, and I can show you published criticisms in the last three weeks of every single name in this situation from me."

Nonetheless, Sonnenfeld's direct involvement with HP's decision-making process raises questions, says Geneva Overholser, professor of journalism at the University of Missouri. "It seems worrisome to me," Overholser says. "If I've been providing information to my readers in good faith that this is a person who speaks out of his own expertise and not out of any bias, and if he in fact made a presentation to the board, it's something my readers ought to know."

NO PAYMENTS MADE Sonnenfeld says he disclosed his role in the board meeting to CNBC on Sept. 11 and Sept. 14 when he appeared on a CNBC TV show. He says he often talks to corporate executives before commenting publicly on a given issue. Alerting reporters to his role at the September board meeting would have been akin to giving up his confidential sources. "If you reveal your sources, you're betraying your confidences," Sonnenfeld says.

Sonnenfeld's disclosure differs significantly from pay-to-publish scenarios in which special interest groups pay influential newsmakers to write scripted op-eds for newspapers and other publications. Sonnenfeld was not paid by Dunn or anyone at HP, and his analysis of the situation has remained consistent throughout the saga.

Sonnenfeld also says that he did not have an exchange with any member of the board during the call. "I was not part of any discussions. I spoke. Nobody said anything to me. I had no debate, I had no persuasion. I merely repeated what I said publicly in the media."

STRONGER MEASURES Indeed, Sonnenfeld emerged early on as one of Dunn's biggest defenders in the scandal, which might have been why he was invited to speak. On Sept. 8, three days before he spoke to the board, Sonnenfeld pointed out to online news site Red Herring that Dunn had told the board she was launching an investigation. He also said he saw no link between Dunn and the questionable tactics used by HP's investigators. "She's an impressive woman," Sonnenfeld told Red Herring. "If under the press of scrutiny the board were to sacrifice her, it would be an act of cowardice."

After the September meeting, Sonnenfeld continued praising Dunn, telling The Economist, for its Sept. 16 issue, that her investigation "was an attempt to hold offenders accountable, instead of the usual wrist-slap of Silicon Valley cronyism."

On Sept. 21, a day before Dunn was forced to step down from HP's board, Sonnenfeld characterized Dunn and HP as victims of out-of-control contractors. "This sort of investigators-gone-wild behavior is in a novel realm," he told wire service AFX.

NEW TALENT In a Sept. 26 BusinessWeek.com article on how to repair the HP board's tarnished image, Sonnenfeld was among other governance experts suggesting the board might have an easier time recruiting new directors if it hired new outside counsel.

"It wouldn't be that [hard] to attract top flight talent to this board," he said. "if they showed a willingness to make changes by changing counsel and bringing in highly credible independent conflict-free parties (see BusinessWeek.com, 9/26/06, "Burnishing a Broken Board's Image")."

Matthew Bishop, New York bureau chief for The Economist, was surprised to learn of Sonnenfeld's role at HP's board meeting. "Everyone's a bit surprised he didn't tell us, and we certainly would have wanted it in the piece," Bishop says. "We probably still would have used his quote, but it just seems a bit puzzling that he didn't tell us."


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