Mike Lynch urges investors to quiz HP on Autonomy fiasco
Software chief calls for detail on fraud claims and blames losses on errors after takeover
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Thursday 21 March 2013
Autonomy's founder has stepped up pressure on Hewlett Packard to disclose details about the allegations of fraud it made against the UK technology company last year when it wrote off $8.8bn (£5.8bn) connected to its buyout of the business.
In an open letter to HP shareholders, Mike Lynch, who left the business in May last year, months before HP's allegations, accused the US firm of acting in an "aggressive and unusual manner throughout this episode".
He said the problem with HP's more than $10bn buyout of Autonomy in 2011 lay in "the mismanagement of that business by HP under its ownership, making it impossible for Autonomy to deliver on HP's expectations".
Leo Apotheker was in charge of HP when it bought Cambridge-based Autonomy, but he was replaced soon afterwards by Meg Whitman, the former eBay boss who returned to the tech world after failing in her bid to become California's governor. She has since been attempting to turn around the business.
In his letter, addressed to shareholders gathering for HP 's annual meeting in California last night, Mr Lynch once again hit back at the claims of fraud levelled against Autonomy when HP announced the writedown in November last year. "Autonomy's accounts were fully audited by Deloitte throughout the period in question and Deloitte has confirmed that it conducted its audit work in full compliance with regulation and professional standards," he wrote. "We refuse to be a scapegoat for HP's own failings."
In regulator filings this month, HP said the authorities on both sides of the Atlantic, including the US Justice Department and the Serious Fraud Office (SFO) in the UK, had opened inquiries into the matter. As a first step, the SFO said it was looking into its use of an Autonomy product to ensure that there was no conflict of interest.
HP has maintained that it has been co-operating fully with the authorities since it made the allegations.
Mr Lynch urged shareholders to press the company on more details and evidence for its allegations. He said Autonomy's former management had begun "alerting Ms Whitman as early as December 2011 to significant problems with the integration of Autonomy into HP that were negatively impacting its performance".
"When did Ms Whitman acknowledge that Autonomy was not performing against expectations?" he asked. "Why was this not communicated to shareholders at that time?"
The letter came ahead of the annual meeting in California, where the HP board was expected to face scrutiny over the Autonomy writedown.
Although Mr Apotheker has long since left the company, and while Ms Whitman remains in favour, investor groups were taking aim at other directors, including the executive chairman, Ray Lane. ISS, a leading shareholder advisory firm,has recommended that investors vote against his re-election.
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