Former HP boss was ready to 'throw predecessor under the bus', court hears
Meg Whitman, the former chief executive of Hewlett-Packard, was happy to “throw her predecessor under the bus” blaming him for the disastrous $11.1bn (£8.73bn) acquisition of British tech company Autonomy, the high court heard on Wednesday.
Whitman was testifying in the $5bn civil fraud trial of Mike Lynch, the Autonomy founder, and former Autonomy chief financial officer Sushovan Hussain. HP successor companies allege that Lynch and Hussain fraudulently inflated the value of Autonomy ahead of the deal, which was announced in August 2011.
A month after the purchase, HP removed chief executive Léo Apotheker, who had been the architect of the move for Autonomy. Whitman, who approved the Autonomy purchase when an HP board member, was made chief executive in September 2011. In November 2012 she announced that HP had written down the value of its business by $8.8bn in the wake of the Autonomy purchase.
In a December 2012 email to her chief communications officer, Henry Gomez, Whitman wrote that she was “Happy to throw Léo under the bus in a tit for tat”, after a news story in which Apotheker said the HP board shared part of the blame for the acquisition problems.
Robert Miles, the QC representing Lynch, asked Whitman if she was “shirking your collective responsibility” in blaming Apotheker.
“It was a moment of anger and disappointment about what had happened here, and I shouldn’t have said it,” Whitman told the court on Wednesday.
Whitman also rejected a comparison between her treatment of Apotheker and her treatment of Lynch, who was ousted in May 2012.
A spokeswoman for Apotheker said: “HP’s acquisition of Autonomy had the full support of the HP board of directors, who endorsed it unanimously on the basis of thorough due diligence. The fact that every member of the board stood behind the transaction at the time it was announced is clear from the proceedings in the high court.”
Lynch and Hussain deny fraud, and
argue that they are being used as scapegoats for the “botched” integration of HP. Lynch also faces criminal charges in the US, which he denies.
In May Hussain was jailed for five years, after a US jury found him guilty of fraud over the sale to HP. The court heard on Wednesday that Hussain will not appear in court to defend himself in the London trial.
The case, one of the biggest fraud trials in British history, has shone a spotlight on the increasingly troubled relationship between Lynch and Whitman, one of the most prominent American businesswomen.
The influential former eBay chief executive previously ran as the Republican candidate for governor in California, and has a net worth of $3.7bn, according to Forbes. She is chief executive of Quibi, a video platform, as well as serving on the boards of Dropbox, HP Enterprises and Proctor & Gamble.
Lynch was present in court throughout Whitman’s testimony.
Lynch, a mathematician educated at Christ’s College, Cambridge, founded Autonomy in 1996. The company specialised in using complex pattern recognition techniques to help organisations search and sort through unstructured information such as emails and phone records. It became a darling of the British tech scene, and Lynch was made a government science advisor and awarded an OBE.
However, in a witness statement entered in court on Wednesday, Whitman described Lynch as unsuitable for an executive role in a large company.
On one occasion, Lynch allegedly failed to inform her that Autonomy would miss revenue targets until the day before the company was due to announce financial results. This was “completely unacceptable conduct for any leader”, Whitman said in her statement.
Lynch allegedly made repeated complaints to Whitman suggesting that Autonomy was not being properly integrated into HP. These included complaints that Autonomy staff were physically barred from HP offices, and that Autonomy was forced to undergo the same checks as third parties when working with HP, according to court documents.
Lynch eventually suggested that Whitman appoint a “craziness Czar” to try to stop “crazy processes” at the company.
Whitman said in her statement: “Dr Lynch’s complaints became less and less focused and grounded in reality.”
Of a later complaint, in which Lynch said that Autonomy had lost multiple senior executives, Whitman said that Lynch “knew that his days at HP were numbered and was trying to create a paper trail he could use to deflect blame elsewhere”.