Autonomy founder set for £4bn legal battle

Mike Lynch in High Court clash with Hewlett Packard

A BLOCKBUSTER High Court trial will next week pit ‘the UK’s Bill Gates’ against one of America’s technology titans.

In one of the biggest fraud claims involving a British businessman, Mike Lynch is accused of cooking the books at his former software firm Autonomy before it was sold to HP for £8.5bn eight years ago.

HP later wrote off most of the company’s value and brought a £3.8bn damages claim against Lynch. The US giant alleges that he and other executives deliberately inflated the firm’s value.

It will claim this even led Lynch to jet out to Rome to try and win business from the Vatican Library.

A deal to digitise the 15th-century library – which houses more than 2m books and manuscripts – was booked in Autonomy’s sales figures even though the project never materialised.

The legal battle has left Lynch fighting for his reputation and estimated £469m fortune.

He has quit a series of directorships at tech start-ups backed by his investment fund, as well as a prestigious post advising Prime Minister Theresa May, so he can focus on his court clashes.

Adding to the pressure are separate criminal charges in the US over the alleged Autonomy fraud, which could see him jailed for 20 years if he is found guilty.

Sushovan Hussain, his former finance chief, was found guilty of similar charges last year.

Lynch, who could be extradited to America, strongly denies the allegations against him and says they stem from different accounting practices on each side of the Atlantic. He has also accused HP of using him as a scapegoat for their disastrous mismanagement of Autonomy after they bought it and has brought a counter-claim against the company.

HP was rife with ‘political infighting’ after the Autonomy deal, his defence documents claim.

Proceedings are due to start on Monday after years of manoeuvring by both sides. Lawyers from City firm Travers Smith are representing HP, with Magic Circle firm Clifford Chance brought in to defend Lynch. The trial is expected to last as long as nine months because of the complex and technical evidence involved.

HP accuses Lynch, Hussain and other executives of artificially inflating Autonomy’s quarterly revenue figures to make the company appear more valuable.

Examples such as the Vatican project saw Autonomy book sales from deals with third-party resellers before it had received any money, it will argue.

However, Lynch has insisted the company’s auditor, Deloitte, never raised issues with his company’s financial reporting and that he relied on its expertise.

Deloitte is being investigated by the Financial Reporting Council over the affair. Deloitte declined to comment yesterday. HP Enterprises, which was spun off from HP, has brought the case to court. It declined to comment.

A spokesman for Lynch said: ‘Mike Lynch is pleased to finally have the opportunity to respond in court to HP’s accusations.’