Former Autonomy boss Mike Lynch calls on shareholders to investigate ‘misleading’ HP statements
Just before an HP shareholder meeting on Wednesday, Lynch published an open letter to HP shareholders, urging them to investigate the ‘misleading statements’ from the management team of Hewlett-Packard, including CEO Meg Whitman.
“I write to you today to raise serious concerns about the way HP has conducted this affair, and to put forward a number of questions that HP management should answer,” wrote Lynch on his blog. “The evidence shows that HP is not just smearing us, but also misleading you, its shareholders. I ask you to help put things right.”
Lynch cited the “serious and damaging allegations” made by HP in November 2012, and said that in the 16 months since then, it has “not provided information or evidence to the Autonomy team to substantiate any allegation.”
Lynch accused HP of instead selectively leaking documents and information to the media, and claimed HP was “frequently using material taken out of context to create false impressions and smear our reputations.”
Lynch also said that these media reports have demonstrated that HP has the documents in its possession that show “beyond doubt” that its allegations are misleading. Lynch also claimed that these reports also show that senior management figures at HP knew full well these statements were misleading.
Indeed, a Financial Times report in February claimed that HP executives were aware of some of the sales practices of Autonomy. It cited audit papers, accounting documents, internal emails and unnamed people familiar with the Autonomy’s deal.
Lynch meanwhile has called on shareholders to investigate HP’s claims.
“I urge you to continue to seek answers to these questions,” said Lynch. “Meg Whitman has made incendiary and defamatory accusations on behalf of her company. She should now present the detailed evidence that justifies those allegations and a $5.5bn write-down in the value of your company.”
Lynch listed a number of questions that HP management need to answer, including why it has repeatedly declined to show Autonomy the allegations or evidence against them. It also said that HP’s claims that Autonomy’s auditors had “missed” certain items and been misled, was misleading, and all the evidence shows Autonomy was fully open and transparent with its auditors.
Lynch has always vehemently denied the allegations made by HP. The company made a $8.8 billion (£5.3bn) non-cash impairment charge as a result of the alleged Autonomy ‘indiscretions’. HP had purchased the British software company for $10.3 billion (£6.7bn) in 2011.
The UK’s Serious Fraud Office (SFO) is investigating the matter, whilst in America, the US Securities Exchange Commission, the FBI and the US Department of Justice are likewise thought to be looking into HP’s claims.
HP seems to be sticking to its guns over the allegations.
“As HP has previously reported, it uncovered numerous accounting irregularities at Autonomy prior to its acquisition by HP,” an HP spokesman was quoted by the Daily Telegraph. “HP reported those irregularities to appropriate civil and criminal regulators in the US and UK. HP continues to cooperate in ongoing investigations by those regulators.”
HP and its directors have already been sued by shareholders for allegedly ignoring red flags on Autonomy’s accounts. However last month it emerged that HP is conducting settlement talks with the shareholders.
Meanwhile a separate lawsuit has also been brought against auditors KPMG and Deloitte for failing to discover evidence of alleged “serious accounting improprieties” during their audits of the former British software giant.
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