Reuters: Autonomy’s former CEO denies HP allegations on misleading accounting practices

Reuters: Autonomy’s former CEO denies HP allegations on misleading accounting practices

Autonomy’s former CEO Mike Lynch denies HP allegations and is confident he will be absolved on any wrongdoing, Reuters reports. As you may know, HP declared today that it was misled into overvaluing Autonomy when it acquired the software company last year.

While HP’s statement didn’t explicitly name Lynch as a suspect, it pointed fingers at some of Autonomy’s former leaders, saying that it was “extremely disappointed to find that some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition by HP.”

According to Lynch, he had not been previously notified by HP or any authorities about these allegations, which surfaced after an investigation process triggered by a whistleblower. “We are shocked, this is a big surprise, it’s completely and utterly wrong and we reject it completely,” he told Reuters in a phone interview from a London office where he was meeting with other former Autonomy executives.

Lynch and several members of Autonomy’s management team had joined HP following the acquisition, but most of them were already out of the company by May 2012 when Lynch also left following a “very disappointing license revenue quarter” for the Autonomy business unit.

In addition to announcing a non-cash impairment charge of $8.8 billion, of which more than $5 billion are linked to this issue, HP revealed that it has referred this matter to the US SEC’s Enforcement Division and the UK’s Serious Fraud Office for civil and criminal investigation. On the civil side of the issue, the company is also “preparing to seek redress against various parties in the appropriate civil courts to recoup what it can for its shareholders.”

Lynch insinuated that HP was trying to turn off the attention from its quarterly results. “I fear that this is a bit of a distraction on the day when they produce their worse set of results in the 70-year history of the company,” he said. He also suggested that HP was inflating the amount of the supposed prejudice, if any: “Look at the size of the writedown. If you’ve done meticulous due diligence with 300 people you can’t get it that wrong.”

In a statement, HP’s former CEO Leo Apotheker declared himself “stunned and disappointed,” noting that due diligence around Autonomy’s acquisition had been “meticulous and thorough, and included two of the world’s largest and most respected auditing firms working on behalf of HP.”

Image credit: Justin Sullivan / Getty Images

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