tom perkins

Monday manifesto: Tom Perkins
One of the key figures in the clashes that shook computer giant Hewlett-Packard, is not a fan of box-ticking legislation

Suzy Jagger in New York
Two years ago Hewlett-Packard endured the worst episode in its history. It dismissed its celebrity chief executive, knifed the chairman and finished off with a phone-bugging and identity theft scandal in which members of the board accounted for their secret surveillance of each other in front of Congress.

"It was never my intention to be a whistle-blower. In fact, I was not," claims Tom Perkins, the former head of the nomination and governance committee, who helped to bring down Carly Fiorina, the former chief executive, and plot to replace Patricia Dunn, the chairman. Having discovered that his own home phone records had been hacked into, and having resigned from the board in protest about the way that the company was behaving, Mr Perkins was encouraged by his lawyer to alert the American regulator, the Securities and Exchange Commission. In the event, he claims, they launched an inquiry all by themselves.

It is coincidental that as Mr Perkins launches his new book, Valley Boy, speaking to The Times in the Mandarin Oriental Hotel in New York, less than a 15-minute taxi ride away, two other giants of American business are enduring the same bloody coups.

Knifings, plotting and timely leaks to the media are being reenacted down the road on Wall Street, at Merrill Lynch and Citigroup.

"It's just a rerun. All the leaks from the boardroom. Leaks are a sign of an unhappy company. At happy companies, nobody bothers. What are you going to leak, the information that everything is great? But all the skulduggery is still rather rare. It's not indicative of what is happening across corporate America," Mr Perkins argues.

An MIT graduate and a Hewlett-Packard lifer, he was disgusted at the way that the company he helped to build, and still clearly adores, had behaved.

But as Mr Perkins fulminates about Ms Dunn and his inability to work with her, it is clear that one of his biggest gripes is that she is symptomatic of America's new obsession with corporate governance, or "box-ticking", heralded by Sarbanes-Oxley.

"Dunn prided herself on corporate governance, asked for consultants, brought in advisers. She knew nothing about technology, and rarely talked about key business issues such as finding replacements for key people, about how to compete better with Dell and IBM."

"Pattie and I saw things differently about what sort of people should be on the board. I wanted Silicon Valley types steeped in tech, she wanted recognised names off Wall Street. We had real trouble working together. We really went for each other.

"In today's world [referring to Sarbanes-Oxley] just substitute box-ticking for judgment; it's certainly easier. Why even have a board these days? Just let the lawyers check off the boxes, take always the safest course and maybe the lawyers will also check for Titanic-size icebergs as well. Increasingly, directors are becoming plug-to-plug compatible � any director can serve on any board. Just comply with corporate governance and don't worry too much about the actual business."

Mr Perkins, who was a founder of one of America's biggest venture capital firms. Kleiner Perkins Caufield & Byers, argues that the Sarbanes-Oxley legislation is scaring off talent from running big business in America. One of the key planks of the legislation is that key executives have to sign off accounts and become personally liable for any mistakes or fraud in a company's books.

"It is harder and harder to get good directors on board. Sox [Sarbanes-Oxley] has put them off. There are huge liabilities now. The idea that the director of an audit committee can somehow ferret out misdeeds is crazy. Big companies are so complex, you can't know everything. What a director needs is a feel for a company, a feel for whether revenues look too high � you're not going to get that by expecting that something will jump out at you from the numbers. A big irony is that Sox would not even have prevented Enron in the first place. Everything that happened at Enron was signed off by the accountants and lawyers."

Mr Perkins does little to hide his contempt of "plug-to-plug, cipher-like" directors who have limited grasp of the nuts and bolts of a business. Having joined Hewlett-Packard in 1957, he worked his way up to lead the marketing team, to help the company to become one of the biggest computer groups in the world.

The self-confessed tech nerd graduated with a degree in physics from the Massachusetts Institute of Technology, having turned down Harvard.

After declaring Harvard Business School "a snap, a breeze", he joined HP and was effectively mentored by Dave Packard, the co-founder of the company that bears his name. It was at HP, ironically, that Perkins claims he learnt how to build a venture capital firm.

"Dave Packard used HP to create new businesses, funded by the group. He managed the company in a way that a venture capitalist would run it. I have copied him ever since."

Mr Perkins says that he is proud of the record of American venture capital. "Every other quarter you see Wall Street scandals. You have yet to see one at an American venture capital firm. They have very simple, direct principles and a big role in helping create companies."

Mr Perkins denied that venture capital and private equity have helped to overheat markets. "Venture capital funds sometimes do have a tendency to pay too much, because they have too much money. Even when there was no money in venture capital, they still had too much money. Markets just have to deal with it. A young venture capital fund has to invest. When you are a bigger and older fund, there is less pressure. The new tech companies are just as good as the old ones, but some will become bubbles. But, hey, I've made a lot of money out of bubbles."

So has Mr Perkins recovered from the fallout of the HP disaster? At the time, he was depicted, in his own words, as "an angry old fossil with a vendetta against the chairman". He claims that both Ms Dunn and Ms Fiorina still harbour grudges, with Ms Dunn accusing him of launching a "well-financed campaign of disinformation" and Ms Fiorina claiming that he feels guilty about his Iago-like behaviour. "Whatever happened to my ol' way with the ladies?" he chuckles. Valley Boy: The Education of Tom Perkinsis out now, published by Nicholas Brealey Publishing. An extract will be published in The Times tomorrow.