Former Automony chief Lynch faces allegations of fraud in US
BRITISH ENTREPRENEUR Mike Lynch is facing fraud charges in the US over the sale of software company Autonomy to HewlettPackard (HP) in 2011.
Mr Lynch and former Autonomy finance executive Stephen Chamberlain were indicted by a federal grand jury in California, accused of a scheme to defraud HP and other stakeholders about the true performance of the company.
HP acquired Cambridge-based Autonomy for $11bn in 2011, but later wrote down its value by $8.8bn and asked the US Justice Department to investigate fraud.
Mr Lynch and Mr Chamberlain stand accused of artificially inflating Autonomy’s revenues and making false and misleading statements to auditors, analysts and regulators.
“The indictment alleges that Lynch and Chamberlain caused Autonomy to make materially false and misleading statements directly to HP regarding Autonomy’s financial condition, performance, and business during the negotiations between HP and Autonomy leading up to the August 18, 2011 acquisition announcement,” the US Department of Justice said.
Lawyers for Mr Lynch described the indictment as a “travesty of justice”.
If convicted, Lynch would have to forfeit $815m and Chamberlain $4m – their proceeds from the alleged offences.
Earlier this year, Britain’s accountancy watchdog began disciplinary proceedings against former bosses at Autonomy and auditors at Deloitte linked to the alleged fraud at the software firm.
The Financial Reporting Council (FRC) pointed the finger at former finance chief Sushovan Hussain and Mr Chamberlain.
Mr Hussain, who has been convicted of fraud in the US, is alleged to have acted dishonestly or recklessly when preparing and approving Autonomy’s annual report and accounts for the years ended December 31, 2009 and December 31, 2010.
He had pleaded not guilty and his attorney said he planned an appeal.
HP has tried to sue Lynch in the civil courts in Britain, while he countersued HP in 2015, saying at the time that “HP was simply incompetent in its operation of Autonomy, and the acquisition was doomed from the very beginning”.