Watchdog probes £7.1bn Autonomy sale to Hewlett Packard

By Peter Campbell for the Daily Mail

Updated: 17:23 EDT, 11 February 2013

A watchdog last night began an investigation into Autonomy’s accounts covering the 18 months before the technology group was sold to Hewlett Packard.

Former executives, including founder Dr Mike Lynch, could face charges if the Financial Reporting Council concludes they wilfully inflated the company’s worth, and passes the information on to the Serious Fraud Office for prosecution.

The software firm’s management have been accused by HP of artificially increasing its value prior to the £7.1billion deal in 2011. Since the deal HP has written down £5billion from the value of the group, and said it had collected evidence of Autonomy bosses’ wrongdoing – which is believed to include a ‘smoking gun’.

Opening the lid: Former Autonomy executives, including founder Dr Mike Lynch, could face charges

It passed details to authorities on both sides of the Atlantic, but until yesterday only the Americans had officially acted on the documents.
Yesterday the Financial Reporting Council launched its own investigation into Autonomy’s accounts between January 2009 and June 2011.

The body sets the UK’s corporate governance code, and monitors standards of accounting and audit work. It has the power to impose an unlimited fine, or to strike any individual from a professional body, but cannot bring criminal or civil charges. But it can pass its findings onto other regulators, as well as the Serious Fraud Office – which could then launch a criminal probe into the matter.

Autonomy executives, who have consistently denied any wrongdoing, are already facing an investigation by the US Department of Justice, in which the FBI is believed to be involved.

Ten legal claims have also been filed by HP’s shareholders against both the computer giant itself and Autonomy’s former management. The FRC’s probe, which is expected to take a number of months, was on the back of a recommendation by the Institute of Chartered Accountants for England and Wales.

No one from the FRC was able to confirm whether it had been passed HP’s evidence by the SFO.

A spokesman for the former management of Autonomy said: ‘We welcome this investigation. As a member of the FTSE 100 the accounts of Autonomy have previously been reviewed by the FRC, including during the period in question, and no actions or changes were recommended or required.’

‘Autonomy received unqualified audit reports throughout its life as a public company.’