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August 10, 2010 11:36 AM

How HP, Covington Handled the Mark Hurd Matter

Posted by Zach Lowe

Our colleagues at Corporate Counsel this year named Hewlett-Packard's in-house department as one of the best in the corporate world, and today the magazine's Sue Reisinger examines how that department handled the alleged sexual harassment case involving now-former CEO Mark Hurd.

Among the tidbits to be found in Reisinger's report: The lawyers, headed by general counsel Michael Holston, learned of the allegations in a letter they received (via Hurd) on June 29 from famed Los Angeles-based attorney Gloria Allred. Allred, of course, was representing Jodie Fisher, a B-movie actress, onetime reality-TV contestant, and HP marketing consultant, who accused Hurd of sexual harassment.

The company and its board (excluding Hurd, who was the chairman), began investigating the allegations and hired Covington & Burling to help with the investigation, Corporate Counsel reports. The investigation concluded that Hurd did not violate the company's sexual harassment policy, though it did uncover evidence that Hurd directed improper payments to Fisher, who consulted for HP in event planning and other areas. It also showed Hurd falsified various expense reports. The San Jose Mercury News has reported that Fisher's initial allegations, presumably included in that June 29 letter, included accusations that Hurd tried to pressure her into sex. Both Hurd and Fisher have denied having any sexual relationship.

The in-house lawyers and board members faced several key questions. Should they publicly disclose the sexual harassment allegations? They chose to do so, but only after a heated debate which split the board nearly in half at first, according to Oracle CEO Larry Ellison, who wrote a letter to The New York Times chastising HP for letting Hurd go. There was also the matter of Hurd's severance package and how to word Hurd's nine-page separation agreement, Corporate Counsel says. The agreement states clearly that it is not intended as proof or evidence that Hurd or anyone else at the company "committed any wrong whatsoever," the magazine reports.

Holston, a former Morgan, Lewis & Bockius partner, probably would like a breather from the salacious. As Reisinger points out today, Holston was hired in 2006 in the wake of a scandal showing HP higher-ups had spied on company executives and reporters to try and pin down the source of leaks. That scandal cost Holston's predecessor her job, according to this piece Reisinger wrote in 2007.

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