Attorney General Bill Lockyer announced a settlement agreement on Thursday with Hewlett-Packard Co.(NYSE: HPQ) over a civil suit involving the company's pretexting scandal.

The agreement, filed today in Santa Clara County Superior Court, calls for HP to pay $14.5 million and to implement a series of measures designed to ensure that its internal investigations are conducted in accordance with California law.

We are pleased to settle this matter with the Attorney General and are committed to ensuring that HP regains its standing as a global leader in corporate ethics and responsibility, said Mark Hurd, HP chairman and chief executive officer.

Under the agreement, $13.5 million of HP's payment will be used to create a Privacy and Piracy Fund to assist California state prosecutors in investigating and prosecuting consumer privacy and information piracy violations.

In addition, $650,000 will be used to pay statutory damages and $350,000 will reimburse the Attorney General's office for the costs of its investigation.

The state had alleged in September that HP hired detectives to tap the phones of several board members and journalists in an attempt to find the source of suspected news leaks.

The civil complained had accused HP of violating privacy and identity laws by using false and faudulent pretenses in conducting its probe.

Several board members were ousted over the scandal, including former chair Patricia Dunn.

Still pending are criminal charges against figures involved in the scandal, including former officers of the company. The state has already filed felony charges against former HP Chairwoman Patricia Dunn, former chief ethics officer Kenvin Hunsaker and three private investigators involved in the leak probe.

HP says the civil settlement guarantees that the state will not pursue further civil charges against HP or its current and former directors, officers and employees.

HP shares closed down 28 cents to $39.86 Thursday on the New York Stock Exchange before the settlement was announced.

California HP Mark Hurd