Hewlett Packard accuses Autonomy founder of fraud

HP paid $11.1bn (£6.8bn) for Autonomy but a year later said it was worth $8.8bn less. The deal was the biggest ever takeover of a British technology firm. This breathless ranting from HP is the sort of personal smear we've come to expect” HP and its shareholders have been fighting a legal battle accusing Autonomy of misleading them over the true value of the company. The latest court document HP also singles out Sushovan Hussain, who was the chief financial officer at Autonomy from 2001 to 2012, saying he was "one of the chief architects of the massive fraud on HP". The San Francisco court filing also said that shareholders and HP management agree "that [Mr] Hussain, along with Autonomy's founder and CEO, Michael Lynch, should be accountable for this fraud". Shareholders had planned to sue HP's management over the botched takeover of Autonomy, but this latest filing confirms they have dropped their claims against the company and will "assist HP in pursuing the perpetrators of the fraud, who inflicted billions of dollars of harm on the company". A spokesperson representing Mr Lynch and Mr Hussain responded with a sharply worded statement of their own: "This breathless ranting from HP is the sort of personal smear we've come to expect. As the emotional outbursts go up, the access to facts seems to go down."

Autonomy was one of the jewels in the crown of the British technology industry, a business based on the expertise of some of the brightest minds to have emerged from Cambridge University.

It may not have been a household name, but it was in the FTSE 100, it sponsored Spurs and its chief executive Mike Lynch was one of the great and good, a non-executive director of the BBC, on the board of the British Library and an advisor on scientific policy to the Prime Minister.

What seems evident is that HP was so determined to get its hands on Autonomy and its enterprise search technology that the directors and their advisors did not look closely enough at the underlying value of the company.

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.

But the stage is set for a lengthy battle in the courts on both sides of the Atlantic, with HP obviously hoping that regulatory authorities step in to back up its claims.

More than a year ago, the UK's accounting regulator, the Financial Reporting Council, (FRC) began an investigation into Autonomy's reporting for the accounting period of January 2009 to June 2011, before it was bought by the US firm HP.

The UK's Serious Fraud Office and the US Department of Justice are also investigating.

Autonomy said at the time it was "fully confident in the financial reporting of the company".

The HP board members that championed the takeover have since left the company.

Meg Whitman took the helm at HP in September 2011, as the Autonomy takeover was being completed.

HP is currently in the middle of a restructuring plan that involves deep job cuts.

bbc