Hewlett-Packard and its auditors have questioned whether or not a $5bn (£4bn) write-down on the worth of software program firm Autonomy will be blamed on alleged fraud engineered by expertise tycoon Mike Lynch, in line with paperwork filed in a US courtroom.
Lynch, the billionaire founder who was as soon as lauded because the UK’s reply to Invoice Gates, was extradited to the US in Could to face felony fraud costs over allegations he tricked HP into overpaying when it closed an $11 billion deal for Autonomy in 2011. .
HP subsequently wrote down the corporate’s worth by $8.8 billion after discovering “critical accounting irregularities” at Autonomy, and blamed Lynch for committing a $5 billion fraud, an accusation Lynch denies.
In 2022, Lynch misplaced a six-year civil fraud case in the UK, through which a Excessive Courtroom choose dominated that HP had been induced to overpay for the acquisition, as a consequence of fraud dedicated by Lynch and former Autonomy CFO Sushovan Hossain, who He’s in jail in the US after being convicted of fraud associated to the identical deal.
Nonetheless, authorized paperwork submitted to a California courtroom by Lynch’s legal professionals and made public on Wednesday seem to point out a disagreement between HP and its third-party auditors, EY, over whether or not the $5 billion determine will be attributed to fraud.
The file incorporates dozens of paperwork that Lynch’s legal professionals obtained legally in constructing the protection case, which weren’t obtainable on the time of Hussein’s trial.
These embody e-mail communications between events together with HP, EY, Autonomy’s former auditor Deloitte, and PwC, which performed an inside investigation into HP’s fraud allegations.
The communications present that EY didn’t assist HP’s declare that the “majority” of the write-down was as a consequence of fraud, and the accounting agency didn’t again up using language within the software program firm’s annual report in 2012.
In December of that 12 months, an HP accountant additionally mentioned in an e-mail that “it will be very troublesome to calculate the portion of impairment that pertains to accounting errors/accounting misstatements.”
The paperwork additionally present that the SEC additionally appeared into HP’s declare that greater than $5 billion of Autonomy’s write-down was as a consequence of fraud.
The courtroom submitting alleges that Lynch was caught in a “blame recreation” over integration and efficiency failures at Autonomy beneath HP’s possession.
“This dispute between HP and its auditor relating to HP’s statements surrounding the write-off is immediately associated to Dr. Lynch’s protection of the federal government’s declare that he misled the general public following HP’s allegations,” the legal professionals mentioned.
Within the lawsuit, Lynch’s legal professionals are looking for a courtroom order to subpoena extra communications and proof from HP, EY, PwC and Deloitte.
Lynch has been detained at a San Francisco tackle with 24-hour safety, which he should pay for, after touchdown within the US following a courtroom ruling that “defendants with such huge wealth pose a big flight danger.”
The businessman, who was awarded an Order of the British Empire (OBE) for companies to enterprise and was an advisor to David Cameron when he was Prime Minister, is the founder and investor in British cybersecurity firm Darktrace.
If Lynch is convicted in the US, he may withstand 20 years in jail.
HP and EY have been contacted for remark.