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Mike Lynch, Founder of Autonomy
Autonomy software giant founder Mike Lynch has "committed a deliberate fraud over a long period of time" to artificially inflate its value, the High Court announced on Monday.
Hewlett-Packard (HP) sued Lynch and former CFO Sushovan Hussain for $ 5 billion (£ 3.8 billion).
They claim that both "Autonomy's declared revenue, growth and gross revenues were artificially inflated".
Hewlett-Packard (HP) paid $ 11.1 billion in 2011 for the company.
The lawsuit is thought to be the biggest lawsuit for civil fraud in the UK.
Both men deny the charges and Mr. Lynch, present at Monday's hearing, has filed a counterclaim of at least $ 125 million against HP for "a series of statements false, misleading and unfair "on his alleged responsibility for alleged accounting irregularities and misrepresentations to Autonomy.
"Serious accounting irregularities"
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Aged 53, from Suffolk, argues that at the time of the sale, Cambridge-based Autonomy was an "innovative technology company and a success story" and that HP "had botched the purchase of autonomy and had destroyed society ".
The High Court also learned Monday that HP had announced the writing of $ 8.8 billion worth of Autonomy a little over a year after its acquisition of the company because it had found "serious accounting irregularities".
Laurence Rabinowitz, a lawyer at HP, said that MM. Lynch and Hussain had knowingly encouraged Autonomy to "embark on a widespread and systematic fraudulent accounting practice" prior to the sale.
He added that Autonomy had "achieved its objectives in terms of turnover and turnover by buying and selling third-party hardware, without any connection to the Autonomy software".
"No statesmen"
In a written opening of 894 pages, he stated that Mr. Lynch was "a controlling and demanding person, who was keenly interested in the progress of individual transactions and sales in general", and that he was "inconceivable" to not be aware. fraudulent practices.
Robert Miles QC, representing Lynch, said in written submissions that when HP bought Autonomy, the company was "very profitable" and "had a bright future."
Mr. Miles claimed that HP "mismanaged the acquisition," adding, "Even the announcement of the offer had been mismanaged because it coincided with HP's announcement of poor business results, deteriorating prospects and the closing (or potential divestment) of important parts of his business. "
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He stated that, "as a result of" miscellaneous failures "," the synergies planned by HP have never been realized ".
He also argued that HP had previously calculated that the autonomy could reach $ 50 billion once integrated into his business.
A spokesman for Mr. Lynch said prior to Monday's hearing that there was "no fraud at Autonomy" and that the "case" amounted to a dispute over differences between UK and US accounting systems ".
The spokesman added: "The real story is that HP, after a long string of failed acquisitions, botched the purchase of Autonomy and destroyed the company, seeking to blame others. Mike will not be a scapegoat for their failures. "
In a separate criminal case in the United States, Mr. Lynch faces 17 counts of securities fraud, wire and conspiracy in federal court over the sale of Autonomy. If he is found guilty, he faces up to 25 years in prison.
Hussain was convicted of wire fraud and other crimes related to the sale of Autonomy in the United States last April. He should be sentenced in May, but he should appeal this conviction.
The High Court hearing, which is expected to last at least nine months and end at the earliest in December, is continuing.
Who is Mike Lynch?
- A Cambridge graduate who built Autonomy for it to be one of the 100 largest British public companies
- Has an OBE for services to the company
- Is a member of the Royal Society
- Formerly a member of the boards of the British Library and the BBC
Autonomy was founded by Mr. Lynch in 1996. He developed software that can extract useful information from "unstructured" sources such as phone calls, emails or videos, and then suggest answers to a question. call center operator or monitor TV channels. for words or topics.
Prior to its acquisition by Hewlett-Packard, the company was headquartered in San Francisco and Cambridge.
In 2010, about 68% of Autonomy's reported revenue came from the United States and other parts of the Americas.
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