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This drama at Hewlett Packard (NYSE:HPQ) is turning into a cross between John le Carre and Carl Hiassen. Call it Tinker, Tailor, Soldier, Stupid, but I can't wait for the novelization.

Let's summarize: HP had a runaway investigation into its own board helmed by its fussbudget chair, Patricia Dunn. Contrary to the wise guys who a) thought this would end with Dunn's quasi-demotion, and b) thought that it would never hit HP's share price, this story has legs and is descending quickly into absurdity, and taking HP's share price with it.

The latest revelations are about CEO Mark Hurd's involvement and, in particular, about the bizarre strategems concocted to plant a bugged  story with a CNET reporter via a fictitious HP employee named Jacob, and then trace that back to HP's leaking boardmember. This stuff is, in two words, deliciously nuts. I'm particularly fond of this part of the story:

As the project evolved, Hunsaker and Anthony Gentilucci, an HP global investigations manager in Boston, began to refine Jacob's character. "I think we have to figure out who Jacob is, weak, strong, vindictive, a Bill and Dave fan, possibly lower level employee . . . will dictate the tone of the e-mail," Gentilucci wrote on Jan. 28.
Yes indeed, HP's security braintrust were diligently working up traits for their imaginary leaker. But now it takes a turn for the dangerous, with it obvious that CEO Mark Hurd has approved this ploy to plant material false stories and an electronic bug on a reporter, all to catch an HP boardmember. Here are two emails that confirm it:
Dunn replied: "Kevin, I think this is very clever. As a matter of course anything that is going to potentially be seen outside HP should have Mark's approval as well.

On Feb. 23, Hunsaker sent an e-mail to Dunn. "FYI, I spoke to Mark a few minutes ago and he is fine with both the concept and the content."

Dunn is gone. The longer HP pretends otherwise, the worse it gets for Hurd and for the share price. It is all over but the announcing.

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