Perkins battered by HP spying scandal

Once upon a time, serving on a public board brought prestige and a few extra bucks. Considering how political some boards have become, VCs have to seriously wonder if it is worth it to keep their public board seats.

It came to light in September that Kleiner Perkins Caufield & Byers co-founder Tom Perkins quit the Hewlett-Packard board in May after learning that HP had spied on board members and reporters while trying identify the source of a company leak.

The scandal has prompted investigations on the state and federal level and has drawn scrutiny from the U.S. Congress, which asked outgoing HP Chairwoman Patricia Dunn, hotshot attorney Larry Sonsini (who is HP’s outside counsel) and others to testify at a hearing on Sept. 28.

Perkins, who has a sterling reputation, has been treated very poorly by HP. First, the company allegedly hired someone who pretended to be Perkins (a practice being called “pretexting” instead of plain old “lying”) to get access to Perkins’ phone records.

What’s worse, after Perkins blew the whistle on the spying operation and blamed Dunn for it, Dunn came out swinging and essentially called him a liar.

The Mercury News reported that it obtained an email that Perkins had sent to Sonsini that said the following: “The investigation was a Pattie Dunn program, 100 percent—conceived and managed by her, and unknown to the board, except perhaps in the most vague and imprecise terms, with the possible exception of Mark [Hurd, HP’s CEO], who she may have briefed.”

Dunn told the Mercury News: “Tom is wrong. He knew about the investigation. He himself posed arguably more aggressive methods. He advocated very strongly to me that we use lie detectors.”

Dunn has alleged that Perkins was upset when he learned that the primary leak suspect was Jay Keyworth, a friend and fellow director who has since resigned from the HP board. “Tom is very upset with me because I didn’t go along with his desire to cover this up,” Dunn told the newspaper. “He wanted Jay’s identity to be kept secret. Tom is a very powerful, very formidable individual to have as an enemy. I regret that very much, but I could never have done it the way he wanted it to be done.”

Perkins did not respond to VCJ’s email seeking comment about Dunn’s remarks. A spokesman for Perkins told the Mercury News: “Ms. Dunn is trying to shift the focus away from her authorizing an invasive and illegitimate investigation that she oversaw.”