Firm reaches settlement with New York Times and BusinessWeek

HP has reached a settlement with The New York Times and three BusinessWeek reporters who had accused the company of spying.

The settlement was not the result of a lawsuit and came after private negotiations between HP and BusinessWeek's Ben Elgin, Peter Burrows and Roger Crockett, as well as New York Times reporter John Markoff. Financial terms were not disclosed.

HP had already paid the California Attorney General's office $14.5m to settle its legal case over the spying charges.

The scandal erupted in September 2006 after an internal HP investigation found evidence of misconduct by private investigators and company employees over attempts to identify the source of a boardroom leak.

It was later revealed that the operation, dubbed Kona II, included lying to phone companies in order to obtain private phone records, and equipping email messages with spyware to report forwarding.

The Kona II investigators were also alleged to have discussed placing surveillance equipment and informants in two national newsrooms.

"What HP did was an affront to the free press," Terry Gross, the San Francisco lawyer representing the parties told The New York Times.

"They did not like what reporters were writing, and they broke into their private telephone accounts to identify who their sources were."

HP said in a written statement that it is "happy to resolve the matter". But the company still faces lawsuits filed by three CNET reporters and one of their family members, as well as a journalist working for Associated Press.