February 14, 2008 | New York Times

By Matt Richtel

SAN FRANCISCO — Hewlett-Packard has agreed to a financial settlement with The New York Times and three BusinessWeek magazine journalists in connection with the company’s spying scandal that stemmed from surreptitiously obtaining private phone records.

The parties to the dispute declined to disclose the amount of the settlement, which was reached privately and not as a result of a lawsuit.

The settlement brings to a close one of a few unresolved aspects of a spying scandal that tarnished Hewlett-Packard and brought down its chairwoman, Patricia C. Dunn, and several high-ranking executives.

To trace what Ms. Dunn and others considered disloyal and risky leaks from the company’s board, H.P. retained investigators who engaged in a wide-ranging investigation in 2006. The inquiry involved “pretexting,” a practice that had someone pretending to be someone else to obtain private records from phone companies.

Phone records compromised included those of the three BusinessWeek staff members — Ben Elgin, Peter Burrows and Roger Crockett — and the family phone records of The New York Times reporter, John Markoff, and his wife, Leslie Terzian Markoff.

“What H.P. did was an affront to the free press,” said Terry Gross, a San Francisco lawyer who represented the reporters for BusinessWeek, part of the Mc-Graw-Hill Companies, their families and The New York Times. “They didn’t like what reporters were writing, and they broke into their private telephone accounts to identify who their sources were.”

In a written statement, Hewlett-Packard said it was pleased to have resolved the matter.

Previously, the company agreed to settle a lawsuit by the California attorney general, paying $14.5 million in fines and promising to change its corporate governance practices.

News organizations have customarily been hesitant about pursuing financial settlements with companies or people they write about, wanting to avoid the perception that coverage could be tied to compensation.

In a statement, The New York Times said it pursued a claim against Hewlett-Packard in part to send the message that “corporate misconduct aimed at silencing the press is not acceptable and will not be tolerated.” The Times pursued the claim on Mr. Markoff’s behalf, and he did not individually seek compensation.

The Times donated its money from the settlement to groups including the Center for Investigative Reporting and the Investigative Journalism Program at the journalism school of the University of California, Berkeley.

Mr. Gross said the BusinessWeek reporters also planned to give some of their settlement money to charity.

The company still faces five lawsuits brought by other journalists and their families, who assert that Hewlett-Packard used pretexting to illegally obtain their phone records. Those cases, filed together in August 2007 in San Francisco Superior Court, are pending, the plaintiffs’ lawyer, Kevin Boyle, indicated.

Two reporters for The Wall Street Journal were also targets of Hewlett-Packard investigators, but The Journal has said it will not take part in legal action or settlement talks.