HP To Sue Former Autonomy CFO And Accuses Mike Lynch Of ‘Fraud’

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HP steps up war of words, promises to sue former Autonomy CFO and says Mike Lynch conducted “fraud”

HP has said it will sue former Autonomy CFO Sushovan Hussain after he filed documents last month to halt HP’s “collusive and unfair” settlement with shareholders disgruntled by alleged accountancy practices that inflated the company’s $11.1 billion (£6.5bn) acquisition of the British analytics firm in 2011.

The firm has also escalated the war of words with former Autonomy CEO Mike Lynch by arguing he should be “held accountable” for the alleged malpractices and once again accused him of fraud.

Collusive Settlement?

mikelynchHussain had argued that HP’s settlement deal with the shareholders was meant to disguise the real reason for its 2012 write-down of Autonomy, namely HP’s own destruction of Autonomy’s success after the acquisition.

“Mr. Hussain has an interest in challenging this collusive settlement because it would shield from adversarial examination the claims of wrongdoing by HP officials,” said Hussain’s complaint. “Indeed, by this settlement, HP seeks to forever bury from disclosure the real reason for its 2012 write-down of Autonomy: HP’s own destruction of Autonomy’s success after the acquisition. And by the broad bar order it seeks, HP seeks to absolve itself of its own responsibility for its losses.”

In June, HP reached an agreement to settle litigation by shareholders upset at the firm’s decision to take a $8.8 billion (£5.3bn) non-cash impairment charge because of “accounting improprieties” relating to its takeover of Autonomy.

Financial Harm

HP has now fired back, and it is certainly pulling no punches in its latest documents filed in a court in California on Monday.

In the court documents, HP reportedly that said it has agreed with its shareholders to sue Mike Lynch, Autonomy’s founder, and Sushovan Hussain, its ex-chief financial officer, over claims they “inflicted billions of dollars of harm on the company”.

“The notion that (Hussain) should be permitted to intervene and challenge the substance of a settlement designed to protect the interests of the company he defrauded is ludicrous,” HP reportedly said in a court filing. “The shareholder plaintiffs who originally sued HP’s directors and officers now agree that Hussain, along with Autonomy’s founder and CEO, Michael Lynch, should be held accountable for this fraud.”

Personal Smears

Meanwhile a spokesman for Dr Lynch and Mr Hussain was quoted by the Daily Telegraph as saying: “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,” said the spokesman for the former Autonomy management. “HP has struck a corrupt and collusive settlement to try to bury the truth rather than face a court. Meg Whitman is buying off a bunch of lawyers so she doesn’t have to answer charges of incompetence and misdirection in front of a judge and jury.

“Quite simply we are asking for discovery and facts, they are trying to hide them – that’s what separates us and her.”

Lynch for his part has always denied HP’s charges, and Autonomy’s former management team have previously claimed that HP was aware of its sales and accounting practices. One of their spokespeople has also previously said that HP’s settlement was designed to avoid embarrassing court appearances by Whitman and other HP executives.

And this is not the first time that HP has accused Autonomy’s former management of fraud, but the vitriolic rhetoric from HP has certainly ramped up a gear.

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Author: Tom Jowitt
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