Autonomy Founder slams HP as US probe opened

 

Department of Justice opens investigation.

HP has confirmed in a regulatory filing that that the US Department of Justice has opened an investigation into alleged fraud at Autonomy, a business intelligence software supplier it acquired, prompting an immediate backlash from the founder of the company.

HP, which wrote down US$5 billion off its acquisition following an internal investigation into the matter, has accused the former management of Autonomy of cooking the books prior to the sale, told investors (page 157) it has made complaints to the UK Serious Fraud Office, the US Department of Justice and the US SEC.

News of the US investigation prompted a speedy response by Mike Lynch, the former CEO of Autonomy who has since left HP.

Lynch said he was yet to hear from US authorities but would co-operate with any investigation.

He lambasted HP for accusing the former management team in the media without providing any financial details behind why it wrote-down the value of the acquisition.

“These allegations are false,” he insisted. “We also do not understand why HP is raising these issues now given that Autonomy reported into the HP Finance team from the day the acquisition completed in October 2011, there was an extensive due diligence process and Autonomy was audited as a public company for many years.

“It is now less clear how much of the US$5 billion write-down is in fact being attributed to the alleged accounting issues, and how much to other changes in business performance and earnings projections,” he said.

Lynch laid out a number of arguments in his defense, reproduced in full below:

  • HP’s CFO Cathie Lesjak and her team, plus a number of outside advisors, had access to all Autonomy accounts and documents from October 2011 onwards, and raised no issues.
     
  • Beginning in November 2011, HP and KPMG reviewed Autonomy’s closing balance sheet in detail, and Ernst & Young reviewed Deloitte’s audit work papers.
     
  • Beginning in October 2011, HP studied in detail Autonomy’s tax structure and transfer pricing as well as its revenue recognition practices (led by Paul Curtis, HP’s worldwide head of revenue recognition).
     
  • An independent, third-party valuation of Autonomy’s assets was carried out in January 2012.
     
  • Quarterly business reviews were held with Autonomy management, Meg Whitman and Cathie Lesjak to discuss Autonomy’s financial performance.
     
  • HP has continued to sell and account for hardware alongside Autonomy software in the same way that Autonomy did for the year since the acquisition completed.
     
  • Regarding differences between IFRS and US GAAP accounting standards, which appear to have a role in some of the allegations HP has made, Autonomy’s accounting policies were made clear in Autonomy’s 2010 annual report.

Copyright © iTnews.com.au . All rights reserved.


Autonomy Founder slams HP as US probe opened
Autonomy founder Mike Lynch.
 
 
 
Top Stories
Coalition's NBN cost-benefit study finds in favour of MTM
FTTP costs too much, would take too long.
 
Who'd have picked a BlackBerry for the Internet of Things?
[Blog] BlackBerry has a more secure future in the physical world.
 
Will Nutanix be outflanked before reaching IPO?
VMware muscles in on storage startup in hyper-converged infrastructure.
 
 
Autonomy founder Mike Lynch.
Sign up to receive iTnews email bulletins
   FOLLOW US...
Latest Comments
Polls
Which is the most prevalent cyber attack method your organisation faces?




   |   View results
Phishing and social engineering
  69%
 
Advanced persistent threats
  3%
 
Unpatched or unsupported software vulnerabilities
  12%
 
Denial of service attacks
  7%
 
Insider threats
  11%
TOTAL VOTES: 626

Vote