The changing rules of corporate spy games

While it may seem like an anomaly, the saga of high-level snooping at Hewlett-Packard sheds light on an ethical balancing act playing out across corporate America.

Companies routinely take measures – including, as in Hewlett Packard's case, retaining the services of outside private investigators – to guard trade secrets and confidential plans. But as technology makes it easier to trace leaks, firms are also seeing the need to avoid cultivating mistrust.

The drama at Hewlett-Packard is highly unusual because clandestine measures focused on top company officials and on journalists, to find which board member was leaking information to the press.

Yet even beyond HP, defining the limits of corporate snooping may be growing in complexity. New technologies are expanding both the opportunities for malfeasance and the ability to chase it down. And in a knowledge-based economy, generating and guarding ideas is now central to any corporation's market value. That involves nurturing loyalty and morale among creative employees, while also monitoring their activities.

"HP had every right to initiate an investigation," says Sean Walsh, a private investigator who works with other corporations in Silicon Valley and the San Francisco area. "Where things went awry was the methodology used in this case."

As the Hewlett-Packard case suggests, sometimes efforts at damage control do more harm than good. HP should be winning plaudits for its recent stock price highs. Instead, the high-tech giant is in the news for the lengths it went to hunt down a board member with loose lips.

By HP's own account on Friday, its leak-tracing efforts crossed a line into "inappropriate" actions. Chief executive officer Mark Hurd gave a news briefing to apologize for investigators' use of techniques such as gaining access to personal phone records under false pretenses.

But questions have continued to emerge about his own role. As a board member who was aware of the investigation, he lent his approval to an attempted e-mail "sting" that targeted a journalist. Investigators hired by HP put a hidden code in the e-mail to trace if it was forwarded to a boardroom leaker. Mr. Hurd was apparently aware of the general stratagem, but not of the tracer code. He has volunteered to talk about the affair at a Capitol Hill hearing Thursday.

A number of cautionary lessons are emerging, say experts, on business ethics, management, and security. While some of the tactics HP used may be illegal, others have landed the company in hot water simply because they were improper.

"The bar of ethics is higher than the bar of the law," says Dean Krehmeyer, who heads the Business Roundtable Institute for Corporate Ethics in Charlottesville, Va.

At the same time, experts say, today's corporations have a need – even a duty – to protect their business secrets.

Page: 1 | 2