Autonomy founder: We didn't defraud HP

HP shocked the tech industry earlier this week when it announced it would take an $8.8 billion one time financial charge. HP claims the charge was due to the company's 2011 acquisition of Autonomy, and further claims that the management of Autonomy " .... used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company" before HP bought it.

Now Autonomy founder Mike Lynch is speaking out to members of the media, defending himself and the management against HP's allegations. In an interview at Business Insider, Lynch claims that he first became aware of HP's claims against him and the other executives when HP sent out the press release this week. He said, "I was certainly shocked but people certainly realize I'm not going to be used as Hewlett-Packard's scapegoat when it's got itself in a mess."

One of the claims HP has made against Autonomy's former management is that they booked hardware sales as software. Lynch said, "That's complete inaccurate. We booked our hardware sales. They were booked at the correct margins. The idea that somehow we weren't taking that cost—even if you took HP's argument, which is inaccurate, but even if it was, it would make no difference to the bottom line or the top line."

HP has said it will be showing the results of its investigation of Autonomy's numbers to the US Securities and Exchange Commission’s Enforcement Division and the UK’s Serious Fraud Office. It also plans to take certain parties to civil court. We imagine that will include Lynch.

Source: Business Insider | Image via HP

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4 Comments

Can't help that's he and several other are being scapegoated for the mistakes of the CEO that followed the CEO that bought Autonomy.

thealexweb said,
Can't help that's he and several other are being scapegoated

No one believes HP. It is solely their own responsibility to perform due diligence when buying another company and they failed to do that. The $8.8b loss is entirely of their own making, and going on past performance it may be a made up excuse to try and hide an underlying performance failure of the rest of HP in general.

dvb2000 said,

No one believes HP. It is solely their own responsibility to perform due diligence when buying another company and they failed to do that.

So the fact that Deloitte and KPMG both missed the purported fraud is HP's fault? Yeah they're left holding the bag, but if things were hidden in such a way so they wouldn't be found unless pointed out by an insider than knew where they were hidden, isn't that kind of what sneaky accounting crime is supposed to be like?

Again I'll just say this is going to be one to watch because it will either show that Autonomy mis-represented itself or Deloitte/KPMG didn't really look very hard and HP just took their word for it.

Apotaker is the CEO that Killed the WebOS group, spouted off about selling or spinning off the PC group and bought Autonomy. Yes Witman was on the board when the decision was made to buy Autonomy, so she's not completely out of the loop, but how is it that She's scape-goating Lynch for her mistakes? For that matter what exactly are her mistakes? If you listened to the interviews she gave after Apotaker was shown the door, it was pretty clear that if it were legally possible, she would have scuttled the Autonomy purchase.

Anyway you slice it, both Apotaker and Autonomy were bad for HP. As far as the fraud goes, I prefer to watch how it all shakes out. IMHO Lynch has to publicly profess innocence, but it's going to come down to the evidence and likely a courtroom or two before we know the truth.

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