Autonomy’s Lynch barred from buying ex-finance chief ’s shares

AUTONOMY founder Mike Lynch has been blocked from buying shares in his venture capital firm from his former finance chief after the US government accused him of making “hush money” payments, an allegation he denies.

US court documents reveal that Sushovan Hussain, facing a five-year jail sentence over Autonomy’s $11.7bn (£9.3bn) sale to Hewlett Packard eight years ago, has been unable to sell shares in Dr Lynch’s UK venture firm Invoke Capital since Dr Lynch was hit with new criminal charges in March.

Mr Hussain was sentenced to 60 months in prison in May after being found guilty on 16 counts of wire and securities fraud related to Autonomy’s sale. He allegedly helped inflate Autonomy’s value, leading HP to overpay for the software company.

Mr Hussain has sold millions of dollars of shares in ICP Darktrace, a subsidiary of Invoke, to Dr Lynch in 18 months. The purchase of Invoke shares allowed Dr Lynch to increase his ownership of cybersecurity business Darktrace, which raised $50m in funding last year at a valuation of $1.65bn.

In documents last week, Mr Hussain’s lawyers said without the share sales Mr Hussain would be unable to pay $10.1m in bonds that would let him avoid jail as he appeals his conviction.

Dr Lynch, who was separately charged by the US last year, was recently hit with further charges of tampering with witnesses, obstructing justice and money laundering. The US government accused him of “hush money” payments and alleged he hoped to influence or prevent testimony that could affect proceedings.

Lawyers for Dr Lynch denied the charges and said he “has generously helped former colleagues hire lawyers to defend themselves ... without a shred of evidence, these same acts of ingenuity and kindness are now said to support a conspiracy to defraud the United States”. Mr Hussain was granted bail when an appeals court said there was a “substantial question” over the conviction. The US government claims Mr Hussain owns $58m in ICP Darktrace shares, a sum he disputes. His lawyers say with Dr Lynch barred from buying them, they cannot be sold.

“[The charges] reduced the number of potential buyers of Mr Hussain’s ICP Darktrace shares from one to zero,” they wrote in filings. “Absent assurance from the government that further share purchases would be permissible, Dr. Lynch will not buy Mr. Hussain’s ICP Darktrace shares, and the Invoke board will not approve their sale.”

Mr Hussain is asking for bail conditions to be lowered, and has offered to put up his house in the south of England as collateral. A hearing over the matter is scheduled for this week. Dr Lynch was first charged but has not travelled to the US to answer the charge. He is expected to face extradition proceedings.

In a separate case, HP is also pursuing Dr Lynch and Mr Hussain for $5bn in damages. Dr Lynch has been giving evidence for three weeks.