HP targets executives in UK fraud allegationSeptember 2014
The US computer multinational Hewlett-Packard (HP), which is mounting a fraud action against a successful UK business it acquired three years ago, is now targeting two of its bosses.
HP bought Autonomy for $11.1bn (£6.67bn, €8.33bn) in the biggest ever takeover of a UK technology company. A year later HP re-calculated Autonomy at only $2.3bn and claimed the company had made false statements about its value.
In an escalation of its legal battle HP said Michael Lynch, Autonomy’s founder and former chief executive, and Sushovan Hussain, the former chief financial officer, should be held accountable for their deception.
It called Hussain “one of the chief architects of the massive fraud on HP”.
Meg Whitman, HP’s chief executive, said: “We believe that there is a wilful effort on the part of certain members of Autonomy management to mislead shareholders when Autonomy was a publicly held company and mislead potential buyers, including HP.”
Part of the dishonesty, HP maintains, concerns the revenue reported by Autonomy for its last full year. More than $200m of the stated £1bn was from “either hardware sales at a loss or fraudulent transactions”.
HP continues: “It simply was not possible for Autonomy and its senior executives to fill the void their deceits created in the forecast.”
Lynch, however, accused HP of “breathless ranting” and “a personal smear”. He said: “As the emotional outbursts go up, the access to facts seems to go down.”
He believed Whitman’s attacks were intended to mask HP’s own poor performance. He said the real reasons for writing down his company’s value were “infighting and poor integration of Autonomy into HP’s operation, leading to a dramatic loss of value in the business”.
HP has made its fraud allegations in a filing to a Californian court hearing Hussain’s demand for the company to release information that it could use against him. In the UK it is preparing a legal case alleging fraud by Lynch and Hussain.
A BBC technology observer has said HP was so keen to buy Autonomy that its directors and advisers failed to look closely at the company’s underlying value.
He said: “What is far from clear amidst the claim and counter-claim is whether Autonomy did break any accounting rules in the run-up to its sale to HP – and, if so, why that was not spotted in the process of due diligence, which is a key part of any such deal.”
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