Tech titan accused of fraud over £8.5bn Autonomy deal
AN ENTREPRENEUR dubbed ‘Britain’s Bill Gates’ cooked the books at his software company before it was sold to US buyers for £8.5bn, a court heard yesterday.
At the start of the UK’s biggest ever fraud trial, Mike Lynch was accused of inflating sales figures at Autonomy to make it appear more valuable than it really was before being sold to HP.
Lynch, who denies the claims, faces a £3.8bn damages claim from HP that could see him lose his £470m fortune. The 53-yearold’s lawyers will argue that ‘irregularities’ in Autonomy’s books highlighted by HP are down to differences in how the firms applied accounting rules.
HP bought Autonomy in 2011, but a year later it wrote off most of the company’s value and accused Lynch and other executives of presiding over a fraud.
In opening arguments for HP at the High Court yesterday, Laurence Rabinowitz QC said: ‘Contrary to what has been said by Dr Lynch, this is not a dispute about accounting standards. It is, pure and simple, a fraud.’
Rabinowitz said that in the years leading up to the deal, Autonomy’s executives were under pressure to continue increasing the company’s sales to make it appear successful.
It was claimed Lynch was a ‘controlling’ boss who must have known fraud was being carried out. In one email Lynch sent to senior colleagues, about a deal that was in danger, he ordered them to ‘own this’ with ‘no F-ing abdications of responsibility’. He added: ‘If there is a problem I WANT TO KNOW ABOUT IT IN A F***ING MILLISECOND.’
The lawyer also accused Lynch of ‘lies’ and ‘deceit’ over R&D costs attributed to a piece of software they claimed was a major breakthrough.
However Lynch’s lawyers claim that accountants at Deloitte never raised any issues with Autonomy’s accounts before the deal was completed. And they said claims about the software costs being fabricated were ‘extreme and unrealistic’.
In their opening submission, they added: ‘HP’s case that there was at some level some underlying misconduct is contrived and exaggerated.’
Proceedings are expected to last nine months because of the complex evidence involved.