Autonomy founder squares up to Hewlett-Packard on day of AGM

Mike Lynch says Autonomy's former management 'refuse to be a scapegoat' for HP's failed buyout of British software firm

The founder of Autonomy, Mike Lynch, has confronted the US computer firm Hewlett-Packard on the day of its annual shareholder meeting, saying the British software firm's former management team "refuse to be a scapegoat for HP's own failings".

In a tirade that marked the latest round of hostilities between the two camps, Lynch accused HP of acting "in an aggressive and unusual manner" over recent months. HP bought Autonomy for $11bn (£7bn) in 2011, only to announce a related $8.8bn writedown last November, citing false accounting.

HP investors are preparing to rebuke the company's board over the disastrous acquisition, with shareholder advisers recommending a vote against the re-election of the chairman, Ray Lane, and other directors whom they criticise for "inconsistent strategies" and a "dismal stock performance".

In an open letter published on Wednesday on the website Lynch set up to defend his reputation, the entrepreneur, worth an estimated £480m thanks to the sale of his company, called on HP to answer a series of questions at its shareholder meeting.

HP alleged in November there were "serious accounting improprieties, disclosure failures and outright misrepresentations" in Autonomy's business, but has provided no other detail. Lynch has rejected the allegations, saying the problem with the Autonomy acquisition lies in the "mismanagement" of the business by HP.

Lynch is demanding to see a copy of a report by the accountants PwC on which HP's accusations are based, and to be told the findings of a committee which he claims was appointed by HP to investigate the circumstances behind the acquisition.

He also asked whether HP had approached the UK Takeover Panel, which supervises the acquisition of publicly listed companies, in an attempt to rescind its offer to buy Autonomy before the deal was voted through by shareholders. Lynch writes: "If so, what was the reason it gave and why was this material change of view not communicated to shareholders?"

Autonomy's book-keeping is now under scrutiny on both sides of the Atlantic. The UK's Serious Fraud Office and the accountancy watchdog, the Financial Reporting Council, have announced investigations, as has the Department of Justice in the United States. The work of Deloitte, Autonomy's auditor until its resignation in December 2012, will also be assessed.

In a statement HP said: "We have handed over our information of serious misrepresentations in Autonomy's accounting to the proper authorities. We continue to co-operate and provide requested information to the relevant authorities on an ongoing basis."

Among those recommending votes against the re-election of HP directors is John Liu, the head of New York City's employee pension funds. Liu wants the two longest serving board members, John Hammergren and Kennedy Thompson, voted off "because of their failure to protect investors from costly, misguided acquisitions". He believes they should share the blame for the earlier ill-fated purchases of the IT groups EDS and Palm, and for the hasty hiring of Léo Apotheker, whose short-lived tenure as chief executive ended shortly after the Autonomy acquisition that he engineered.

Institutional Shareholder Services, which advises stockholders on voting, recommends that investors vote against Lane, Hammergren and Thompson. Glass Lewis & Co is also advising against the return of the venture-capital investor Marc Andreessen and the lead independent director, Rajiv Gupta.


Juliette Garside

The GuardianTramp

Related Content

Article image
Hewlett-Packard allegations: Autonomy founder Mike Lynch tries to clear name
As legal arguments from both sides grind on in the US, UK Serious Fraud Office investigation still not concluded

Juliette Garside

14, Aug, 2014 @3:05 PM

Article image
Autonomy founder Mike Lynch to leave Hewlett-Packard
Entrepreneur is latest executive to leave 'too bureaucratic' HP as tech giant announces 27,000 job cuts and drop in net profits. By Charles Arthur

Charles Arthur

24, May, 2012 @4:12 PM

Article image
Hewlett-Packard blames Autonomy 'improprieties' for $8.8bn writedown
Former managers at British tech firm deny claims and accuse HP of destroying a 'world leader'

Dominic Rushe in New York, Charles Arthur and Juliette Garside

20, Nov, 2012 @9:59 PM

Article image
Autonomy made 80% less UK profit than stated, Hewlett-Packard finds
American firm investigated irregularities in accounting at British software company it bought for more than $10bn

Juliette Garside, telecoms correspondent

03, Feb, 2014 @7:45 PM

Article image
Hewlett-Packard sues Autonomy founder for damages
US firm files claim for $5bn in high court against Mike Lynch, who vows to counter-sue for ‘smear campaign’

Juliette Garside

31, Mar, 2015 @3:37 PM

Article image
Hewlett-Packard faces $1bn lawsuit from shareholders over Autonomy deal

HP accused of ignoring evidence on 'vastly overvalued' acquisition while Autonomy founder denies financial impropriety

Juliette Garside

07, May, 2013 @10:16 PM

Article image
Hewlett-Packard launches £6bn takeover bid for Autonomy
UK-based search software company confirms approach from US technology multinational

Juliette Garside

18, Aug, 2011 @7:35 PM

Article image
Hewlett-Packard concerns over Autonomy deals with Washington firm
Details of Autonomy's takeover of MicroLink revealed, as Hewlett-Packard's action continues over alleged 'improprieties'

Juliette Garside

04, Sep, 2014 @10:42 PM

Article image
Hewlett-Packard's Autonomy claims inconceivable, says Mike Lynch

Autonomy founder says he will not be HP's scapegoat after $5bn writedown on value of software firm

Juliette Garside

23, Nov, 2012 @7:56 PM

Article image
Hewlett-Packard: the warning signs were there
Nils Pratley: Autonomy, in its independent life, was a company that seemed to be in perpetual war with half the City's analysts over accounting treatments

Nils Pratley

20, Nov, 2012 @10:10 PM