SAN FRANCISCO – Ousted Hewlett-Packard Co. CEO Mark Hurd has settled allegations of sexual harassment lodged against him by a female contract worker for HP, a person with knowledge of the case told The Associated Press.

The harassment accusation set off a chain of events that led to the discovery of allegedly falsified expense reports for dinners Hurd had with the woman and culminated in Hurd’s forced resignation Friday from the world’s largest technology company.

The person familiar with the case told the AP late Satuday that Hurd agreed to pay the woman but would not reveal the size of the payment. The deal was reached Thursday, a day before Hurd’s resignation. The settlement was between Hurd and his accuser and did not involve a payment from HP, this person said.

This person was granted anonymity because they were not authorized to speak publicly about the issue.

The nature of the harassment complaint could not be learned. Hurd and a lawyer representing the woman, whose identity could not be learned, said the relationship was not sexual.

The woman was paid up to $5,000 per event to greet people and make introductions among executives attending HP events that she helped organize.

HP’s board of directors said its investigation found that Hurd listed other people as his dinner partners on expense reports when he’d been out with the woman. HP also claimed Hurd arranged for her to be paid for work she didn’t do.

There was only one instance in which that occurred, the person close to the case said, but it was for an event that was canceled at the last minute and the woman’s contract required that she would be paid unless an event was canceled 30 days in advance.

The amount of money in question could not be learned.

Hurd, 53, insists they were legitimate business expenses. Hurd says the errors in the reports may have been entered unwittingly by an assistant, according to the person close to the case.

The company determined Hurd didn’t violate its sexual harassment policy but broke its rules of conduct and irreparably harmed his credibility and integrity.

HP now must find a new leader to keep HP on the course he mapped out.

Hurd engineered a stunning turnaround of the Silicon Valley stalwart.

Under Hurd, HP has spent more than $20 billion on acquisitions to transform itself from a computer and printer maker dependent on ink sales for profits to a well-rounded seller of hardware and lucrative business services. HP’s market value nearly doubled during his five years.

The company stands at a turning point to integrate some of those acquisitions, the most recent of which was the purchase of smart phone maker Palm Inc. for $1.4 billion in June.

HP’s stock fell nearly 10 percent to $41.85 in after-hours trading, when the news was released after the close of markets Friday.

The company has a deep bench in management and the stock drop was reactive and doesn’t reflect the company’s prospects, an analyst said.

"I don’t view his departure as catastrophic," said Dinesh Moorjani, an analyst with Gleacher & Co. "The strategy is working fine. The level of uncertainty for me is relatively low just given the circumstances. This wasn’t a one-man company."

Hurd, who spent 25 years at ATM maker NCR Corp. before coming to HP in April 2005, became a Wall Street darling. The $13.9 billion acquisition of Electronic Data Systems made HP a major player in technology services, challenging archrival IBM Corp.

HP also now offers computer networking, helped by the $2.7 billion takeover of 3Com Corp., racheting up the rivalry with Cisco Systems Inc. The Palm acquisition catapulted the company into the fast-growing smart phone business.

The additions also broadened the pool of people who could replace Hurd. It’s a deep bench, and internal candidates could have an edge, given that Hurd and predecessor Carly Fiorina — who got the boot in 2005 over concern about her management style and her decision to buy Compaq Computer — both came from outside HP.

Inside candidates could include Todd Bradley, who oversees personal computers and mobile devices at HP; Vyomesh Joshi, who leads the printer division; Ann Livermore, in charge of servers, services, software and storage; and Shane Robison, leader of HP’s corporate strategy and marketing. Chief Financial Officer Cathie Lesjak, now interim CEO, took herself out of the running for the permanent job.

In recent weeks, Hurd was in talks for a three-year contract that could have been worth $100 million, the person close to the case said. Those went off track when the woman accused him and HP of sexual harassment, this person said.

The woman’s lawyer, celebrity attorney Gloria Allred, declined to describe the alleged harassment. Allred would not identify her client or make her available for an interview.

Hurd will get about $28 million in cash and stock in severance.

Hurd’s ouster is the third in five years at HP’s top echelon. First was Fiorina’s in 2005, then former Chairwoman Patricia Dunn was ousted in 2006 amid a boardroom spying scandal that involved spying on reporters’ and directors’ phone records to suss out the source of leaks to the media.

"It says they’re off track in some fundamental way," said Stephen Diamond, associate professor at Santa Clara University School of Law and an expert on business law.

"The first thing is, they have to find the right kind of CEO," he added. "And I think what that CEO needs to do is come in and say, ‘How many board members were here during the last two scandals? If you were, please resign now."

DUBAI, United Arab Emirates – The United Arab Emirates outlined plans Sunday to block BlackBerry e-mail, messaging and Web browsing services in a crackdown that could jeopardize efforts to establish the country as an international business hub.

The government cited a potential security threat because encrypted data sent on the devices is moved abroad, where it cannot be monitored for illegal activity. But the decision — quickly followed by a similar move in Saudi Arabia — raises questions about whether the conservative Gulf nations are trying to further control content they deem politically or morally objectionable.

BlackBerry phones have a strong following in the region, not only among foreign professionals in commercial centers such as Dubai and Abu Dhabi, but also among youth who see their relatively secure communication channels as a way to avoid unwanted government attention.

"The authorities have used a variety of arguments, like it can be used by terrorists" to justify the crackdown, said Christopher Davidson, a professor at the University of Durham in Britain, who has written extensively about the region. "Yes that’s true, but it can also be used by civil society campaigners and activists."

The UAE’s decision will prevent hundreds of thousands of BlackBerry users from accessing e-mail and the Web on their handsets starting in October. It’s unclear whether the ban will extend to foreign visitors with roaming services, including the roughly 100,000 passengers who pass through the region’s busiest airport in Dubai each day.

The ban risks further damaging the UAE’s reputation as a relatively easy place to do business.

Dubai, one of seven hereditary sheikdoms in the federation, in particular has sought to turn itself into a global finance, trade and tourism hub. But its reputation has been tarnished by a credit crisis that has left the emirate more than $100 billion in debt.

Residents say the BlackBerry crackdown will only do more harm, making foreign businesses think twice before setting up shop in the country.

"They’ll think now they’ve banned the BlackBerry, maybe next time it’ll be the Internet," said Shakir Mahmood, a Dubai-based debt collector and BlackBerry user originally from Iraq.

This isn’t the first time BlackBerry and Emirati officials have had run-ins over security and the popular handsets, a fixture in professionals’ pockets and purses the world over.

Last year, BlackBerry maker Research in Motion Ltd. criticized a directive by the UAE state-owned mobile operator Etisalat telling the company’s BlackBerry users to install software described as an "upgrade" required for "service enhancements."

RIM said tests showed it was in fact spy software that could allow outsiders to access private information stored on the phones. It strongly distanced itself from Etisalat’s decision and told users how to remove the software.

Within hours of Sunday’s UAE decision to block BlackBerry services, a telecommunications official in neighboring Saudi Arabia said the desert kingdom would do the same, starting later this month. The Saudi official, who spoke on condition of anonymity because he was not authorized to talk to the media, said the country’s telecommunications regulator would issue a statement soon.

Ali Mohammed of Saudi Telecom, however, said the company had "not received any instructions about BlackBerry from the ministry."

Government censors in both Saudi Arabia and the UAE routinely block access to websites and other media deemed to carry content that runs contrary to the nations’ conservative Islamic values or that could stoke political unrest.

Regulators in the UAE say BlackBerry devices operate outside a set of national security and safety laws enacted in 2007, the year after the BlackBerry debuted in the UAE. They say they are concerned some BlackBerry services "allow users to act without any legal accountability, causing judicial, social and national security concerns."

The government said it is singling out the BlackBerry, and not other smart phones such as Apple Inc.’s iPhone and Nokia Corp. handsets, because the Blackberry is the only one that automatically sends users’ data to servers overseas.

Unlike other smart phones, BlackBerry devices use a system that updates a user’s inbox by sending encrypted messages through company servers abroad, including RIM’s home country of Canada.

Users like the system because it is seen as more secure, but it also makes BlackBerry messages far harder to monitor than ones sent through domestic servers that authorities can more easily tap into, analysts say.

"This is the irony, that it’s the device with the highest security features. These same security features that corporations like have become an issue of national security for the government," said Simon Simonian, an analyst at Dubai-based investment bank Shuaa Capital. "The UAE doesn’t want to take any chances and they want to monitor what is going on in the country."

The dispute highlights an ongoing tug-of-war between autocratic governments determined to control what information citizens consume online and share with others, and technology providers whose loyalties lie with their customers and shareholders.

Similar tensions erupted earlier this year between China and Google Inc. after the Internet company said it would stop censoring its search results in the country. After China warned it might not renew its license, Google agreed to obey local laws and stop automatically switching mainland users to its unfiltered Hong Kong site.

Emirati authorities are eager to portray an image of a safe and stable society free from the extremism found elsewhere in the region. They have taken steps to crack down on terror financing and efforts by neighboring Iran to sidestep international sanctions over its nuclear program.

Davidson cited alarm in the UAE and other Gulf nations over the role online organization played in helping to drive anti-government protests in Iran during the 2009 elections as a factor in their moves to tighten Internet controls.

Emirati regulators said in a statement they sought to reach a compromise with RIM on their concerns, but failed to come to an agreement.

"With no solution available and in the public interest … BlackBerry Messenger, BlackBerry E-mail and BlackBerry Web-browsing services will be suspended until an acceptable solution can be developed and applied," said the director-general of the Telecommunications Regulatory Authority, Mohamed al-Ghanim.

"BlackBerry appears to be compliant in similar regulatory environments of other countries, which makes noncompliance in the UAE both disappointing and of great concern," he added in a statement carried on state news agency WAM.

A spokeswoman for RIM said the Canadian company had no immediate comment.

Other countries, including India and the Gulf state of Bahrain, have also raised concerns about BlackBerry messaging features, but have not blocked them outright.

RIM said in a statement last week it "respects both the regulatory requirements of government and the security and privacy needs of corporations and consumers."

The company declined to disclose details of talks it has had with regulators in the more than 175 countries where it operates, but defended its phones’ security features as "widely accepted" by customers and governments.

Etisalat and Du, the UAE’s two state-run telephone companies, said they are working on alternative services for their BlackBerry customers.

RIM does not disclose the number of BlackBerry users in the UAE. However, analyst Simonian estimated there are "hundreds of thousands" of BlackBerry users in the country.

None contacted by The Associated Press on Sunday said they supported the pending ban.

"I find it irritating, actually. It’s a service everyone is using, and all of a sudden, they’re just going to disconnect it?" said a 30-year-old manager at a Dubai mall who would give only his first name, Khalid, because he did not want to attract attention from the authorities.

___

Associated Press Writers Abdullah al-Shihri in Riyadh, Saudi Arabia, and Michael Casey in Dubai contributed to this report.

SAN FRANCISCO – Google Inc. triggered a false alarm Thursday by posting a notice that its search engine and several other services had been cut off from mainland China - a key market where the company has been locked in a high-profile battle over online censorship.

But what initially looked like a dramatic development turned out to be nothing more than a technological hiccup.

After the company’s report of a complete blockage in China had been relayed by The Associated Press and other media, Google backed off the claim.

The company, based in Mountain View, said its system for tracking Internet access appeared to have misinterpreted what was happening to its search, mobile and advertising services in China.

"It’s possible that our machines could overestimate the level of blockage," Google said in a statement. "That seems to be what happened (Thursday) when there was a relatively small blockage. It appears now that users in China are accessing our properties normally."

When the AP initially inquired about the problem in China, a Google spokesman said he had no other details beyond what the company was listing on its own website.

Google began posting daily status updates on the availability of its services in China four months ago. Thursday marked the first time Google has described its search engine as being completely blocked. Other Google services, such as Google’s blogging tools and YouTube video site, have been blocked for months.

The company is running the risk of being cut off from the world’s most populous country because it is no longer willing to censor search results that China’s government considers to be subversive or pornographic.

Google had cooperated with the government’s restrictions for four years, but said it had a change of heart after uncovering a computer hacking attack that it traced to China.

Even as it took a moral stand, Google sought to keep a toehold in one of the Internet’s most promising markets by automatically shifting search requests from mainland China to its service in Hong Kong, which doesn’t fall under the same censorship rules.

But that detour eventually riled China’s government, prompting another change that required visitors to Google.cn to click on the page to get to the Hong Kong search engine. That compromise paid off three weeks ago when China’s regulators renewed Google’s Internet license in the country for another year.

But Google’s report of a new barrier in China momentarily raised questions about whether the government had become fed up with the company again.

TORONTO |
Sun Jul 18, 2010 12:51pm EDT

By Paul Thomasch

NEW YORK |
Fri Jul 2, 2010 11:02am EDT