Hewlett-Packard accuses Autonomy founder of fraud as row escalates

US technology group claims Michael Lynch, Autonomy's former CEO, should be 'held accountable' as it lodges court papers. Hewlett-Packard (HP) has said former Autonomy chief executive Michael Lynch should be "held accountable" as it accused the founder of the UK software company of fraud in a court filing on Monday.


In a dramatic escalation of the war of words between the US group and the tech entrepreneur, HP said it would also sue Autonomy's ex-chief financial officer Sushovan Hussain. Hussain is seeking to block HP's settlement of three shareholder lawsuits over its troubled purchase of the British software company.


Hussain is trying to block the settlement, saying HP officials were wrongly absolved in the ill-fated acquisition of Autonomy for $11.1bn (£6.6bn) in 2011. HP wrote down Autonomy's value by $8.8bn (£5.2bn) a year later and accused Autonomy officials of accounting fraud, which those executives have denied.


In the settlement, shareholders had agreed to end efforts to force current and former HP officials, including chief executive Meg Whitman, to pay damages to HP over its Autonomy purchase. Instead, the shareholders agreed to help HP pursue claims against former Autonomy officials such as Hussain and former CEO Michael Lynch, who have denied wrongdoing.


"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 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."


Last month, Hussain said in a court filing that the "collusive and unfair" settlement, if approved by a federal judge, would let HP "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."


"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," Autonomy said in a statement in response to HP's filing. "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."


In an open letter published in March, Lynch accused Whitman of "incendiary and defamatory" accusations.


He said: "In the 16 months that have followed [since the value of Autonomy was written down], HP has not provided information or evidence to the Autonomy team to substantiate any allegation. Instead, it has selectively leaked documents and information to the international media, frequently using material taken out of context to create false impressions and smear our reputations."


Lynch also claims that HP was aware of certain Autonomy sales practices months before it told shareholders that a whistle blower had raised the alarm.


HP responded with a statement, saying: "As HP has previously reported, it uncovered numerous accounting irregularities at Autonomy prior to its acquisition by HP. 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."


However, the HP court filing is by far the strongest set of accusations leveled at either side in the Autonomy row.


The guardian.com