Autonomy fraud allegation apparently diluted in HP filing
Mike Lynch, whose company Autonomy was bought by HP for $11 billion (£6.7bn) in 2011, has defended his company’s accounts, saying HP is “backtracking” from claims that Autonomy fraudulently exaggerated its business strength before the acquisition.
HP took an $8.8 billion (£5.3bn) accounting charge in November, effectively devaluing its Autonomy acquisition to around $2 billion, which HP CEO Meg Whitman blamed on accounting fraud by Autonomy executives. Now Lynch’s site, AutonomyAccounts.org, says these claims have softened in HP’s 10-K form, which must be filed after the end of the financial year. Meanwhile, it has been confirmed that the US Department of Justice is investigating Autonomy’s books.
“HP finally filed its 10-K …but again failed to provide any detailed information on the alleged accounting impropriety, or how this could possibly have resulted in such a substantial write down,” said Lynch, who claimed HP is having trouble backing up its claims of fraud.
“HP’s failure to provide us and its own shareholders with clarity on these crucial issues does not come as much of a surprise,” he said. “Ever since putting out those very serious but non-specific allegations last month, HP has refused to disclose either the substance of its allegations or any supporting evidence.”
Picking over the filing, Lynch comes up with the following small changes to HP’s language.
In November, HP said that “the majority” of the $5 billion impairment charge was due to Autonomy fraud – now it says the charge “incorporates” alleged improprieties.
Also, HP’s latest filing says it “believes” Autonomy executives misrepresented accounts, but in November, it had stated this as “fact”, according to Lynch, who asks: “Why is [HP] less confident now than it was a month ago?”
HP shareholders have sued auditors Deloitte and KPMG, who examined Autonomy’s books before the acquisition.
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