UK tycoon Lynch ready for fraud verdict in epic HP court fight


  • TECH
  • Saturday, 29 Jan 2022

Mike Lynch, whose company was acquired by Hewlett Packard Enterprise Co, is about to see if he can be held responsible for the company' s Bloomberg

British software tycoon Mike Lynch took a huge gamble when he decided to fight a civil case brought by Hewlett Packard Enterprise Co. in a UK court. After a nine-month trial and a two-year waiting period, he’s about to find out if his decision will pay off.

Rather than face the US Department of Justice and criminal charges of fraud, Lynch instead first opted to fight HP and its civil claim in London.

The case focused on events leading up to HP’s US$11bil (RM46.09bil) takeover in 2011 of Lynch’s firm, Autonomy Corp. HP alleged that Lynch inflated the value of Autonomy; Lynch argued that HP management simply ran his company into the ground.

HP wants US$5bil (RM20.95bil) in damages from Lynch and Sushovan Hussain, Autonomy’s former finance director. Now, almost two years after Lynch walked out of the civil court -– a moment before the Covid-19 pandemic hit Britain – High Court Justice Robert Hildyard is set to outline his findings.

Here are some of the key things to look out for:

HP’s central allegation of fraud

The two sides clashed during the trial over whether Autonomy bent the rules to beat stock market expectations, effectively deceiving HP. The Silicon Valley hardware giant paid US$11bil (RM46.09bil) to acquire Autonomy, only to write down the value by US$8.8bil (RM36.87bil) a year later.

The verdict hangs on whether the judge believes Lynch and his subordinates deliberately inflated Autonomy’s value. He’s accused of using undisclosed hardware sales and "contrived” contracts with friendly resellers to boost Autonomy’s revenue as quarters were coming to an end.

Dec 2019: HP Says Lynch Told ‘Lie After Lie’ as US$5bil (RM20.95bil) Trial Wraps

Lynch’s personal role

HP’s attorneys characterised Lynch as a controlling and dishonest chief executive officer with intimate knowledge of his company’s accounting practices. Lynch argued that HP spent millions of dollars and failed to tie the Autonomy founder to any wrongdoing.

In reality, HP brought the case because it was suffering from "buyer’s remorse,” Lynch’s lawyer Robert Miles said. "Even where arguably there is some evidence of wrong taking place,” there is none to show Lynch was involved or even aware of it, he said.

Jan 2020: Lynch’s ‘Unusual Level of Control’ at Autonomy Worries Judge

HP’s management of Autonomy

The lawsuit also looked at whether HP sufficiently scrutinised Autonomy’s books before the deal, in a period when the computing giant sought to transform itself into a software-focused company only to change course months later.

Lynch’s attorney used internal company documents to argue the case was a function of infighting at HP, where top executives disagreed about the Autonomy purchase and the board wavered on strategy.

Former HP chief Meg Whitman, who testified at the trial, was forced to confront emails where she wrote that she was prepared to throw her predecessor "under the bus” to deflect blame over the failed deal.

June 2019: Ex-HP CEO Whitman Email Said She’d ‘Throw Leo Under the Bus’

Where did any harm take place?

Lynch and his legal team will be looking to Hildyard’s ruling for clues on where the judge deems any harms to have taken place.

Though extradition proceedings are proceeding separately, Lynch’s chances of staying away from the U.S. criminal justice system depend to a significant degree on where Hildyard rules that any misconduct took place – and whether HP itself suffered harm.

Lynch is expected to argue that a person should not be extradited if the alleged offences could have been tried in the UK.

Feb: 2021: Tech Tycoon Warns of U.S. Overreach in Extradition Fight – Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

   

Next In Tech News

SG victims of spoofed work emails suffer losses of over S$70mil, 149 victims in 2022
Victims in SG lose S$466,000 to scammers impersonating ecommerce platform staff
Spotify translating more and more podcasts into multiple languages
Apple announces new accessibility tools for people with disabilities
Communities, Twitter’s take on subreddits, grow after global rollout
Wireless and rechargeable: Captain America saves the Xbox controller
Boeing's Starliner capsule docks with space station in uncrewed flight test
‘Tunic’ for PCs and Xbox: Early ‘Legend Of Zelda’, but with a fox
Hyundai Motor Group to invest $5.5 billion to build EV, battery facilities in U.S
Analysis-Tesla brand threatened by Musk harassment claim, criticism of Democrats

Others Also Read