Hewlett Lawyers Reveal More Details Behind HP Vote-Buying Claim

In a brief filed with a Delaware judge Friday and released Monday after HP deleted sensitive internal information, Hewlett's attorneys contended that CEO Carly Fiorina and CFO Robert Wayman failed to back up their claim that Hewlett had taken pessimistic internal documents out of context.

"Where are the documents confirming the Fiorina/Wayman scenario?"Hewlett's lawyers wrote. "Plaintiffs put into evidence the internal reports and e-mails showing distress among management. Where are the contrary reports and e-mails?"

The brief was the equivalent of closing arguments after a three-day trial that ended Thursday in Chancery Court in Wilmington, Del. Hewlett sued HP in hopes of overturning a shareholder vote that gave HP a narrow margin of support for the Compaq deal.

In HP's closing argument, released Saturday, its lawyers urged Hewlett to give up, contending that he had presented circumstantial evidence "with the subtlety and intrigue of an Oliver Stone screenplay."

Hewlett contends that HP got Deutsche Bank investment managers, who originally voted to reject the deal, to switch their decision at the last minute by threatening to take future investment banking business elsewhere. At trial, Hewlett lawyers cited recordings of conversations by Fiorina and Deutsche Bank representatives that referred to the companies' deep relationship.

In their new filing, Hewlett's lawyers revealed that in one recorded call, Dean Barr, Deutsche Bank Asset Management's CIO, told people who controlled the decision on the HP-Compaq vote: "... as fast as humanly possible, get this vote changed." The transcript notes that people could be heard laughing when Barr said a decision on how to vote had been reached "after careful consideration."

Hewlett's attorneys added that HP's proxy solicitor, Alan Miller, had noted on a chart that the company had a "carrot of future business" that could be used to persuade Deutsche Bank to support the deal. In opening statements at trial, Hewlett attorney Stephen Neal said Miller had written HP had "a carrot," but did not use the full phrase, which would appear to more directly support Hewlett's allegation. A Hewlett spokesman declined to comment.

Hewlett's attorneys also claimed Deutsche Bank may have switched as many as 24 million shares, instead of 17 million previously alleged, in favor of the Compaq deal.

That number is important because Hewlett is asking Judge William B. Chandler III to overturn Deutsche Bank's votes and possibly transfer them to the "no" category. A preliminary tally released two weeks ago showed that HP won the shareholder vote by 45 million shares, or 51.4 percent to 48.6 percent.

"The stockholder vote on the merger was neither free nor fair," Hewlett's attorneys wrote. "The vote was tainted by material misrepresentations and omissions as well as a misuse of corporate patronage and should be set aside by this court."

Judge Chandler said Thursday he would rule quickly. If he lets the $18.2 billion deal stand, HP and Compaq hope to officially launch their merged company May 7.

HP shares rose 1 cent to $16.97 in trading Monday on the New York Stock Exchange, where Compaq shares rose 15 cents, or 1.5 percent, to $10.30.

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