PracticeAccounting FirmsHP to sue Autonomy founder and ex-CFO for $5.1bn

HP to sue Autonomy founder and ex-CFO for $5.1bn

Lynch is set to counter sue for £100m for loss and damage caused by HP's accusations

HP to sue Autonomy founder and ex-CFO for $5.1bn

THE increasingly bitter tussle between Hewlett-Packard and Autonomy has escalated after the US technology giant filed a claim for damages of $5.1bn (£3.46bn) against Autonomy founder Mike Lynch and former chief financial officer, Sushovan Hussain.

Lynch meanwhile, is set to counter sue for £100m for loss and damage caused by HP’s accusations.

When HP bought Autonomy for $11.1bn (£6.7bn) in 2011 it went on to accuse the British software company of inflating its profits. Within a year of the deal being signed, HP wrote down the value of its purchase by $8.8bn, of which $5bn was attributed to accounting misstatements.

In restated accounts published on Companies House last year, HP drastically revised Autonomy’s 2010 performance and claimed to have uncovered “extensive errors (including misstatements)” in the accounts, which were audited by Deloitte. Lynch, speaking on behalf of Autonomy’s former management, has consistently denied any impropriety, saying the loss in value of the company was down to HP’s mismanagement.

In August last year, HP announced plans to sue Deloitte over its auditing of Autonomy’s accounts in the two years leading up to its botched acquisition on the UK software company.

Deloitte has said that any HP claim “would be utterly without merit” and that it would defend itself strongly against it. “Deloitte was not engaged by HP, or by Autonomy, to provide any due diligence in relation to the acquisition of Autonomy. Deloitte UK was auditor to Autonomy at the time of its acquisition by HP. Deloitte UK conducted its audit work in full compliance with regulation and professional standards,” it said in a statement.

Mike Lynch, Autonomy’s founder and former CEO who has always denied any wrongdoing, has argued that the difference between Autonomy’s and HP’s valuation of the company stem from different accounting policies applied under US GAAP and IFRS, a claim HP has rubbished as “patently ridiculous’.

The UK Serious Fraud Office closed its probe in January, stating that there was not enough evidence to secure a conviction of Autonomy’s former executives, but it did cede jurisdiction to the US authorities. Other investigations, namely the US Securities and Exchange Commission and the Federal Bureau of Investigation are believed to be ongoing.

 

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