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Software tycoon Mike Lynch blasts new US cover-up claims on eve of titanic court battle
BRITISH technology tycoon Mike Lynch last night hit out at ‘outrageous’ new claims in the US that he laundered money, destroyed documents and paid ‘hush money’ to cover up an alleged fraud.
The new criminal charges brought by the US government stunned Lynch and his team of lawyers on the eve of a blockbuster High Court battle in London.
The US Department of Justice (DoJ) on Friday night added three counts of conspiracy and securities fraud to its existing charge sheet against Lynch, carrying even heavier potential sentences.
Lynch is accused of cooking the books of his Cambridge-based software firm Autonomy before an illfated £8.3 billion takeover by Californian computer giant Hewlett Packard. The latest set of charges, which carry a maximum 25-year sentence if the Autonomy founder is found guilty, represent a major blow to Lynch as he heads to the High Court in London tomorrow.
The $5.1billion trial brought by HP in the UK is one of the most eagerly anticipated cases ever involving a British businessman. Lynch is countersuing for $160million, claiming his reputation has been damaged by the allegations.
It means Lynch, once dubbed ‘Britain’s Bill Gates’, now faces an intensifying battle on two fronts. He will hope to clear his name in London over the coming months, but it remains unclear whether he will travel to America to contest the DoJ’s charges or fight extradition.
In the US, he has now been accused by the DoJ of trying to ‘cover up, conceal, influence witnesses to, and otherwise obstruct investigations’ into the alleged conspiracy related to the sale of Autonomy to HP in 2011.
Lynch is alleged to have fraudulently inflated the accounts at the FTSE100 software firm before the takeover, causing HP to write down the value of the deal by £6.7billion shortly after. Lynch strongly denies any wrongdoing and claims the write-downs came from differences between US and UK accounting standards.
In November last year, the DoJ first filed charges against Lynch and Stephen Chamberlain, Autonomy’s former vice president of finance. It has now added a series of new and even more damaging charges and allegations against Lynch.
These include claims that he bought a total of $4.2million worth of shares last year in private companies backed by his investment firm Invoke Capital from Sushovan Hussain, Autonomy’s former chief financial officer. Hussain was convicted in the US last year for his part in the alleged fraud and is still awaiting sentencing.
The new allegations include details of four separate £100 million bank transfers made by Lynch into different bank accounts after the Autonomy takeover.
Last night, a spokesman for Lynch said: ‘These are baseless, egregious charges issued on the eve of the trial in the UK, where this case belongs, and Dr Lynch denies them vigorously.’
Lynch’s lawyers Chris Morvillo, of Clifford Chance, and Reid Weingarten, of Steptoe & Johnson, called the new charges unveiled in San Francisco ‘outrageous’ and questioned the timing given the High Court trial tomorrow.
They said: ‘Something is horribly amiss in San Francisco, where the Wild West “shoot first, ask questions later” approach to investigations – originally deployed by HP in this case – is sadly still alive and well.’
If Lynch, who lives in a Georgian manor house in Suffolk, does go to America to try to clear his name in court, he risks potential conviction. However, if he refuses to travel, the US could try to extradite him. HP’s lawyers will lay out their case against Lynch on Monday and Tuesday. On HP’s side is Laurence Rabinowitz QC, of One Essex Court. On Wednesday and Thursday, Lynch will give his defence.
Defending the entrepreneur is Robert Miles QC, of 4 Stone Buildings, who has worked on cases involving Robert Maxwell and Bernie Madoff. On the civil case, a spokesman said: ‘Mike Lynch is pleased to finally have the opportunity to respond in court to HP’s accusations. There was no fraud at Autonomy.’