We’ve been thinking about how Roger McNamee, a well-known investor, and most of the market, really did think all along that Carly’s proposal for the HP-Compaq merger was a lousy one. And if that’s true, how did she ever pull it off in the first place? If institutional investors on Wall Street were voting against the merger, which they were, why were HP’s own specific shareholders signing up for the deal?

We’ll never know for sure, but the story about Deutsche Bank’s role is one that echoes the scandals surrounding investment bank analysts during the dot bomb era. It should make us remember to ask harder questions about proposed mergers, acquisitions and even IPOs here in Silicon Valley. Deutsche Bank was a large shareholder in HP, and so was obliged to vote on the merger based on the interest of its investors. But Deutsche Bank also had an investment banking relationship with HP, so naturally it wanted to nurture the relationship with HP as best it could to secure lucrative commissions. That conflict later led it to be fined $750,000 by the SEC. While the public found out about that conflict of interest after the vote, no one seems to have commented on this as reflecting a breakdown in the market’s checks and balances on corporate decisions, including Fiorina’s.

Here’s what we know about the events:

(1) Sept. 4, 2001. The day after Carly Fiorina announced the merger plans, investors dump HP shares, driving the price down by 19 percent — a clear consensus the deal was a bad one.

(2) Sept. 6, 2001. Director Walter Hewlett and his foundation, which holds 5.2 percent of HP’s shares, comes out against the merger. The stock soars 17 percent in anticipation of a reversal, erasing most of the previous loss. Again, a clear sign the market didn’t want the deal.

(3) March 15, 2002. Officials of Deutsche Bank’s asset management division, which owns 17 million HP shares, vote against the deal, presumably because they feel it isn’t in the best interest of their clients.

(4) March 17, 2002. In a voice mail, obtained by the Mercury News, Fiorina tells CFO Bob Wayman they might need to do “something extraordinary” to win over Deutsche Bank.

(5) No exact date known. The public finds out after the final merger vote that HP executives confidentially hire investment bankers from another division of Deutsche Bank to provide “market intelligence” during the proxy fight, agreeing to pay them $1 million, with a $1 million bonus if the merger goes through. According to SEC findings later, when HP officials hear the asset management arm has voted no, they ask the Deutsche Bank investment bankers to intervene. The bankers contact Dean Barr, a top executive from Deutsche Asset Management. Barr arranges for the group to hear last-minute pitches on the proposed merger from both HP and Walter Hewlett. Also disclosed is that HP has a banking relationship with Deutsche Bank.

(6) March 19, 2002. On this day, the deadline for a vote change by shareholders on the merger, HP’s executives have a phone call with the team of Deutsche Asset Management HP officials. The bankers of Deutsche Bank are also listening in. During the call, Fiorina says: “This is obviously of great importance to us as a company. It is of great importance to our ongoing relationship.” Also, Dean Barr remindes the money managers who control 17 million votes that HP is an “enormous” customer of the bank. Barr also tells the managers, who had previously decided to vote against the merger, that they would have to defend a “no” vote to the highest executives of Deutsche Bank, and even mentions the top executive’s names. “Obviously, if you don’t want to change your vote, that’s your call,” Barr says, according to a transcript of the March 19 call obtained by the Mercury News. “I would suggest to you — and I’m not trying to put undue pressure — but make sure that you have a very strong documented rationale for why you voted the way you did.”

(7) By the end of the call, the committee agrees to vote all 17 million shares in favor of the deal, helping HP eke out a narrow victory.

(8) In 2003. The SEC fines Deutsche Bank $750,000 for hiding a conflict of interest when it voted. SEC District Administrator Helane Morrison said that the moment Deutsche Bank investment bankers got involved in the voting process — which is supposed to be an independent decision focused only on what’s good for investors — the asset-management team should have either refrained from voting or disclosed to investors that Deutsche Bank was a paid adviser on the matter up for vote. An investment adviser “needs to operate conflict-free,” she said. Deutsche Bank hid that conflict.

A judge who heard evidence during a hearing in 2002 said: “This fact raises clear questions about the integrity of the internal ethical wall that purportedly separates Deutsche Bank’s asset management division from its commercial division.”

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There is nothing new in this. We all know how the “Chinese Wall” became an empty metaphor during the boom. This is just one in a string of examples, and probably not the last. The question is, have we learned our lesson for the road?

So back to McNamee, and his comments about the HP-Compaq deal being a bad one. Of course, the deal was a good one initially for Compaq shareholders, who got a good offer from HP for their shares. So Compaq’s CEO during the merger process, Michael Capellas, was pretty savvy. In fact, when Capellas became CEO of WorldCom as it emerged from bankruptcy as MCI, McNamee’s firm at the time, Silver Lake, invested $175 million in MCI, citing Capellas as the reason. Ironically, Capellas, who effectively got HP involved in a bad deal by making a good one for Compaq, has been bandied about as a candidate for the HP CEO job.