U.S. boardroom-spying case puts D&O insurers on alert

A recent boardroom-spying incident at Hewlett-Packard Co. is putting a spotlight on “pretexting,” the latest scandalous corporate behavior to put providers of directors and officers (D&O) insurance on alert, according to an article published by A.M. Best.
According to the Sept. 18 issue of BestWeek, Hewlitt-Packard admitted that on the orders of its chairman, Patricia Dunn, it used a controversial data-gathering technique, known as “pre-texting,” to investigate media leaks from its boardroom. In this case, company-paid investigators masqueraded as H-P board members and journalists to obtain H-P board members’ phone records.
A longtime director, George Keyworth, was accused of being the source of an information leak and will be resigning from his position. Dunn said she will also step down in January.
A.M. Best notes that while spying isn’t a new practice within corporations, “D&O insurance experts say they’ve yet to see such behavior raised in the context of a potential claim. That may soon change if criminal and civil actions emerge from the ongoing federal and state probes of H-P and its directors, the experts say.”