Just when you thought silly season had ended on Capitol Hill, Congress has taken up the case of the Hewlett-Packard board shenanigans. To satisfy the sense of self-importance, The House Energy and Commerce Committee felt compelled to equate this largely petty act of boardroom intrigue with Watergate and Enron, according to this afternoon's coverage on MSNBC.com.
"We have before us witnesses from Hewlett-Packard to discuss a plumbers operation that would make Richard Nixon blush were he still alive," Democratic Rep. John Dingell of Michigan said.
Other lawmakers said the scandal was reminiscent of the Enron Corp. debacle, in which top management claimed not to know of serious wrongdoing that ultimately brought the company down. The panel members said the comparison was especially disappointing for a company with the stature of HP, a 67-year-old computer and printer maker with a reputation for integrity.
"It's a sad day for this proud company," said Rep. Diana DeGette of Colorado, the panel's senior Democrat. "Something has really gone wrong at this institution."
Of these, Rep. Degette's comments are the most lucid. From every angle, it looks like HP Chairwoman Patricia Dunn, and some of those around her, crossed ethical and legal boundaries when they attempted to discover the board member who was repeatedly leaking information from confidential board meetings. There were far better ways of handling this than hiring a detective firm to impersonate board members and journalists in order to get a hold of their phone records.
But let's apply some context here. While it's likely laws were broken, the aggrieved parties can be counted on two hands at most. Watergate involved presidential wrongdoing, an ensuing cover-up and lies upon lies to the American people. Enron management engineered a massive stock fraud over several years specifically designed to hide mounting losses. HP, on the other hand, is a boardroom spat that got out of hand.
For all the bluster, the Congressional hearings are providing no new information. It's merely a convenient forum for anti-business grandstanding. Fortunately, as of now, HP's stock price has not been affected, but it would be a shame if, in the interest of appearing "tough on corporate crime," Congress itself begins push down the value of HP shares. That only penalizes investors and employees, who until now, have been unaffected and unharmed by all this intrigue.
Of course, when government goes headhunting in the corporate suite, it's the rank-and-file employees and 401(k) holders that end up on the chopping block. Recall when the government dragged out its very weak case against Martha Stewart: far more shareowner value, not mention jobs, were lost at Martha Stewart's Omnimedia company than at Imclone, whose stock she was accused of, but never tried for, selling on an illegal inside tip.
Although tens of thousands lost their life savings in the Enron scandal, what justice was served by a government's dissolution of Arthur Andersen as part of the case? Where a handful of Andersen employees should have gone to jail, the government chose instead put thousands of Andersen employees out of work.
If Dunn and her colleagues at HP broke the law, there is a process for adjudication. Parading HP broad members through Washington for a few minutes on the local news back in the home district doesn't serve investors, employees or the economy.