Autonomy’s Lynch sues HP for £100m

MIKE Lynch is suing Hewlett Packard for more than £100m after saying his name was blackened by allegations of fraud.

The founder of technology firm Autonomy yesterday launched a claim in the UK High Court.

He said he wanted HP boss Meg Whitman to account for ‘the damage that’s been done by making these statements that she knew weren’t true’ about him.

His case – the latest twist in a three-year saga – comes several months after HP sued Lynch and former Autonomy finance chief Sushovan Hussain, alleging they masterminded a £3bn fraud while at the software maker.

HP paid £7.1bn to buy Autonomy in 2011, but within a year wrote down £5bn from its value and claimed it had discovered a massive accounting scandal.

Lynch has always denied the accusations, and says that the epic destruction of value came from HP’s mismanagement of the company, as well as unrealistic integration savings.

This meant the deal was ‘doomed from the very beginning,’ he said yesterday.

Court documents filed yesterday say that parts of HP refused to work with

‘HP didn’t even read their own report’

Autonomy shortly after the deal, and that the computer maker was ‘in chaos’.

The documents state integration was ‘delayed due to political infighting within HP’ and that the business was ‘not given the support it needed to thrive… in some cases its efforts were undermined by other divisions within HP’.

It also makes the claim that HP salesmen were incentivised to ‘market and sell competing third-party software products rather than Autonomy software’.

Much of Autonomy’s top team left within six months of the acquisition. HP said that Autonomy had disguised its growth rate by refusing to disclose hardware sales, and by using complicated accounting techniques to book revenues early.

But the due diligence report by KPMG ahead of the deal, which came to light last month, identified both of these as key parts of Auton- omy’s practices. Lynch yesterday said: ‘Over the past three years HP has made many statements that were highly damaging to me and misleading to the stock market.

‘Worse – HP knew, or should have known, these statements were false.’ He added: ‘HP wasn’t misled by us or anyone else – evidence will show they didn’t even read their own due diligence report.’

At the time of the deal, HP gave Autonomy a potential value of £11.9bn – compared to its market value of £4.2bn on the London Stock Exchange at the time. According to court documents, HP’s finance boss Cathie Lesjak warned the company’s board that ‘HP would be unable to capture the optimistic synergies on which its valuation of Autonomy [was based]’.

A spokesman for HP said: ‘Mike Lynch’s lawsuit is a laughable and desperate attempt to divert attention from the $5bn [£3bn] lawsuit HP has filed and the ongoing criminal investigation.

‘HP anxiously looks forward to the day Lynch and Hussain will be forced to answer for their actions in court.’