HP's legal battle against Mike Lynch of Autonomy is about to begin



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After nearly eight years of acrimony, Mike Lynch, founder of HP and Autonomy, is finally preparing for a $ 5.1 billion judicial clash Monday.

In a legal battle that could last up to nine months and include explosive testimonials from key players who have publicly stated little or nothing about the case, the acquisition by HP of 11 Billion dollars of Lynch's business software, Autonomy, will be the subject of a judicial review.

HP has accused the former chief financial officer of Lynch and Autonomy, Sushovan Hussain, of fraud and overestimating the value of the company. Lynch and Sushovan deny these claims. Lynch is asking for $ 150 million.

Leo Apotheker, former CEO of HP.
Getty

Originally, HP was a giant of enterprise and computer software. But technology began to evolve and in 2011, software "devoured the world", as said at the time the venture capitalist Marc Andreessen.

Leo Apotheker, an SAP executive, was responsible for executing HP at the end of 2010, and the acquisition of Autonomy was at the heart of its strategy to turn HP into a software giant. It did not work and Apotheker was fired even though the deal was concluded.

The former CEO of eBay, Meg Whitman, took over the most important position at the end of 2011. A year later, HP's stock was around $ 15 and the company wrote off 8, $ 8 billion from the acquisition of Autonomy.

In 2015, HP filed a lawsuit with Lynch and Hussain in the London High Court. The trial starts on Monday.

HP alleges that Lynch and Hussain conspired to cook Autonomy's books, resulting in a $ 5 billion overpayment. He claims that the two men "engaged in fraudulent activities while they were executives at Autonomy" and were responsible for "serious accounting irregularities, disclosure failures and misrepresentations".

Lynch and Hussain have both denied the allegations, and Lynch is claiming $ 150 million for damage to the reputation. According to them, any loss of value would amount to the mismanagement of autonomy by HP after its acquisition.

The fact that the US Department of Justice filed a criminal indictment against Mike Lynch in November has been made more complicated by the lawsuits in London, accusing the head of the court of Fraud company. Lynch did not travel to the United States for the procedure and risk extradition.

The United States has added to the indictment on Friday new criminal charges, punishable by a maximum term of imprisonment of 25 years. Lynch did not immediately react to the new charges, but the moment will only intensify the pressure on Monday.

Sushovan Hussain, former CFO of Autonomy.
Autonomy

The United States has also previously convicted Sushovan Hussain of fraud and found him guilty of 16 counts of wire fraud and securities. Hussain's sentence has been postponed and his bail conditions prevent him from leaving the United States. Although it's a separate criminal trial, the verdict of guilt could strengthen HP's case while he's heading to court.

According to court documents filed by HP and reviewed by Business Insider, Hussain intends to participate in the London lawsuit. It is not clear if he can participate via a video link. HP argued that Hussain should testify earlier than expected, in the event that his sentence, if any, would result in his incarceration.

Christopher "Stopher" Egan, the former CEO of US operations Autonomy, is another complication. Egan entered into a "Prosecution Agreement" with US prosecutors in 2017, in which he became a cooperating witness and admitting certain wrongdoing.

Egan was to be HP's star witness at the London trial, but according to the registry, he did not want to testify after his lawsuit in the United States.

However, Business Insider now understands that Egan could testify at the London trial. Lynch and other personalities in HP's history should also be called to testify. This includes Leo Apotheker, the former CEO of HP who had overseen the operation, and his successor, Meg Whitman.

A spokesman for HP said: "HPE does not want to comment on a legal case in progress at the moment".

A spokesman for Mike Lynch said: "Mike Lynch is pleased to finally be able to answer HP's charges in court and there has been no fraud in Autonomy. 39, a case that comes down to a dispute between the United Kingdom and the United States accounting systems and will focus on the proper exercise of professional judgments established in a given context and at a given time, with full knowledge and with approval of many experts and financial and technical advisors.

"In reality, after many acquisitions, HP has botched the purchase of Autonomy and destroyed the company, seeking to blame others. Mike will not be a scapegoat for their failures."

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