America Criticised For Mike Lynch Extradition Request

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US DoJ officials damned for filing extradition request for former Autonomy boss, whilst a court case is ongoing in London

Authorities in the United States have been condemned for filing an official extradition request for former Autonomy CEO and co-founder Dr Mike Lynch.

The timing of the US request, during an ongoing High Court legal trial in London, is sure to give Dr Lynch’s defence team plenty of ammunition to use against US authorities.

The US move was heavily criticised by the former Brexit Secretary David Davies, who according to the Daily Telegraph condemned America’s attempt to extradite the tech billionaire at an “extraordinarily inappropriate time.”

 

US request

It is understood that officials at the US Department of Justice (DoJ) filed the extradition request in September.

Lynch is wanted in the US to stand trial in California over 17 alleged criminal charges of securities and wire fraud over the Autonomy deal.

And in a hearing in the federal court in San Francisco last week, Judge Charles Breyer reportedly issued an order asking the US State Department to present a timetable for extradition proceedings by 1 December.

But the issue is that Dr Lynch is currently tied up with a £5bn court battle in London which began in March this year, meaning that DoJ authorities would have been perfectly aware of this case currently being tried in a UK court, when they filed their request.

In June Dr Lynch took to the stand to deny HP’s allegations that he mislead markets and inflated his firm’s value before it was sold to Hewlett Packard (HP) for $11bn (£8.7 billion) way back in 2011.

HP’s acquisition of Autonomy resulted in much bitter mud slinging after HP filed an $8.8bn writedown of Autonomy just a year later in 2012.

During his lengthy testimony on the stand, the 54 year old hit out at HP and its management, in particular HP’s former CEO Meg Whitman (she is now CEO of HPE).

At the time, the Financial Times quoted Lynch as saying that Whitman was “out of her depth” and “could not cope with all the fires” at the company.

Dr Lynch has always denied misleading investors, auditors and the market. Dr Lynch’s team has also stated that the dispute stems from a misunderstanding of UK and US accounting rules.

He reportedly said in a witness statement that he had been made a “scapegoat” when HP, under Whitman, failed to integrate Autonomy and blamed “managerial infighting, poor planning, lack of leadership. and, most critically, HP’s decision to push out the key people responsible.”

According to Dr Lynch, HP in 2012 was riven with political infighting and Whitman was “out of her depth” because “HP was in total crisis and Whitman could not cope with all the fires.

Lynch also denied being involved in the disputed transactions identified by HPE, and said that the majority of the disputed transactions “generally occurred below my level” and as a FTSE 100 chief executive: “I was not aware of every transaction going on around the world in all of Autonomy’s various subsidiaries”.

The FT reported that Dr Lynch had said he relied on accountants Deloitte and added that: “I do not believe that there was anything materially wrong with Autonomy’s accounts.”

In May 2018, the legal tussle between HP and British software firm Autonomy in the United States resulted in a victory for the American tech firm, after Autonomy’s former chief financial officer Sushovan Hussain was found guilty of artificially inflating the firm’s financial position before it was sold. Hussain is currently serving five years in prison in the US.

The UK court case meanwhile continues, despite the US extradition request.

Legal tussles

HP’s acquisition of Autonomy in 2011 was the largest-ever buyout of a European technology firm. The deal was intended to spearhead HP’s move into software, but instead HP a year later wrote off three-quarters of what it had paid.

In September 2016 HPE sold its software business, including the Autonomy operation, to British IT firm Micro Focus for only $8.8 billion (£7bn).

In April 2015 HP had sued Hussain and Autonomy co-founder Mike Lynch for $5.1 billion in London’s High Court of Justice, making similar claims of fraud, in a case believed to be the largest-ever civil prosecution of British nationals.

On this side of the Atlantic, the Serious Fraud Office (SFO) in Britain closed its investigation into the sale of Autonomy to HP, claiming there was ‘insufficient evidence’ for a realistic prospect of conviction.

Dr Mike Lynch countersued HP for $160m in 2015, saying at the time the company had ruined his reputation and that it was “incompetent in its operation of Autonomy”, leading to the acquisition’s failure.

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Author: Tom Jowitt
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