HP hits former Autonomy execs with $US5bn suit
- 01 April, 2015 07:04
The UK's Serious Fraud Office may have dropped its investigation of software firm Autonomy earlier this year, but that doesn't appear to have done much to allay HP's ire. HP -- which acquired Autonomy in 2011 -- has confirmed that it plans to sue Mike Lynch and Sushovan Hussain, Autonomy's former CEO and CFO, for $US5.1 billion.
HP filed a Claim Form against Lynch and Hussain on Monday alleging they engaged in fraudulent activities while executives at Autonomy, an HP spokeswoman said via email. "The lawsuit seeks damages from them of approximately $US5.1 billion."
HP will not comment further on the case until the proceedings have been served on the defendants, she said.
HP's filing was made in London's Chancery Division High Court. In response, Lynch, via his website AutonomyAccounts.org, said that Autonomy's former management team plans to strike back with a counterlawsuit, citing "loss and damage caused by false and negligent statements made against them by HP." The counterlawsuit will be filed in the U.K. and will likely seek more than £100 million in damages.
On November 20, 2012, HP announced an "impairment charge" of $US8.8 billion as a result of what it called "accounting improprieties, misrepresentations and disclosure failures in Autonomy financial statements prior to 2011 acquisition by HP." Lynch takes issue with that move, and says it marked the beginning of a "smear campaign" against him and other Autonomy executives.
It's not clear from Lynch's website which other former Autonomy executives are represented by his group.
HP acquired Autonomy for $US11.7 billion. HP shareholders filed suit in 2012, and U.K. regulators launched their investigation into the deal the following year. An investigation by the U.S. Department of Justice is ongoing.
The U.S. Department of Justice did not immediately respond to a request for comment.
"The billions-of-dollar allegations from both sides involved here clearly shows the bad blood from the soured deal," said Raymond Van Dyke, a technology attorney based in Washington, D.C. who isn't involved in this legal tussle.
Indeed, "HP seems to genuinely believe that its previous management was essentially hoodwinked by Autonomy's management into believing that the company was worth far more than it really was," said Charles King, principal analyst with Pund-IT.
The $US5.1 billion suit against Lynch and Hussain is designed in part to recover that considerable difference in value, but also at least partly to demonstrate that HP will do everything in its power to punish those responsible for one of the most embarrassing and damaging episodes in its history, he said.
"The underlying message here is that HP won't be a patsy," King said, "and that anyone making that assumption should be prepared for a long and serious showdown both in and out of court."