UK tech tycoon Mike Lynch charged with fraud in the US over HP-Autonomy deal

Charges relate to HP’s purchase of Autonomy in 2011 – the tech giant later accused the UK firm of falsely inflating its revenues

HP alleges that Lynch made false representations about his company's finances (AP)

UK tech tycoon Mike Lynch has been charged with fraud in the US over his involvement in the sale of software company Autonomy to Hewlett-Packard in 2011.

HP bought Autonomy from the firm’s then-chief executive Mr Lynch and his chief financial officer Sushovan Hussain for $11bn (£8.6bn) seven years ago.

However, one year later the new owners wrote off $8.8bn of the value of the deal, citing “accounting improprieties”.

The group accused Mr Lynch and Mr Hussain of artificially inflating the revenues of Autonomy by up to $700m over a two-and-a-half-year period preceding the deal.

Mr Hussain was convicted of fraud earlier this year.

The criminal charges against Mr Lynch include 14 counts of conspiracy and fraud and carry a maximum penalty of up to 20 years in prison.

Mr Lynch has always denied any wrongdoing, and lawyers for the former Autonomy chief executive said in a statement on Friday that the indictment “is a travesty of justice”.

Chris Morvillo of Clifford Chance and Reid Weingarten of Steptoe & Johnson said: “Mike Lynch is a world-leading entrepreneur who started from nothing and spent his life building a multi-billion dollar technology business that solved critical problems for companies and governments all around the world. These stale allegations are meritless and we reject them emphatically.

“This case is unsupportable. It targets a British citizen with rehashed allegations about a British company regarding events that occurred in Britain a decade ago. It has no place in a US court.

“The claims amount to a business dispute over the application of UK accounting standards, which is the subject of a civil case with HP in the courts of England, where it belongs.”

Mr Lynch’s lawyers added: “There was no conspiracy at Autonomy and no fraud against HP for the DoJ to take up. HP has a long history of failed acquisitions. Autonomy was merely the latest successful company it destroyed.

“HP has sought to blame Autonomy for its own crippling errors, and has falsely accused Mike Lynch to cover its own tracks. Mike Lynch will not be a scapegoat for their failures. He has done nothing wrong and will vigorously defend the charges against him.”

In May of this year, the accounting watchdog launched disciplinary action against Deloitte over its audit of Autonomy.

The Financial Reporting Council said Deloitte’s conduct during its audit of the software firm fell “significantly short of the standards reasonably to be expected”.