HP will pay $14.5m to keep California prosecutors from filing civil charges against the company and its directors - both current and former.

The company that turned pretexting into a common term today announced its convenient arrangement with the California Attorney General's office. The majority of HP's payment - $13.5m - will go toward creating a Privacy and Piracy Fund that will back California investigations into violations of the P words. Another $650,000 will go toward statutory damages, and $350,000 will go straight to the Attorney General's office to cover its investigation of HP's spy probe.

"We are pleased to settle this matter with the Attorney General and are committed to ensuring that HP regains its standing as a global leader in corporate ethics and responsibility," said Mark Hurd, HP's chief.

Hurd continues to survive this scandal in style, having received a promotion to the Chairman post after former Chairman Patricia Dunn resigned. Dunn still faces criminal charges, along with four others tied to the fiasco.

HP has agreed to some voyeuristic conditions as part of its settlement. An independent director, for example, will now monitor HP's legal and ethical practices.

In addition, HP has been required to hire a chief ethics officer and to hire an expert in the investigatory field - steps the company has already taken. HP must also "implement a series of measures designed to ensure that its internal investigations are conducted in accordance with California law and with the company's high ethical standards."

"HP has traditionally been a leader in the area of business ethics and I look forward to working with the management team to help ensure that the company operates with the highest standards of integrity," said new board member Ken Thompson, who is Wachovia's CEO and will monitor HP's board investigations.

Thompson is well versed in the art of pretexting, which is handy.

At $14.5m, it seems that HP got off pretty light. It probably made that much on ink as lawyers pumped out their documents dealing with the spy case. ®

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