Ex-Executive of Autonomy Seeks to Block HP Settlement Over Disastrous Deal

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Hewlett-Packard agreed last month to settle three shareholder lawsuits related to its acquisition of Autonomy.Credit Justin Sullivan/Getty Images

Hewlett-Packard sought late last month to take a big step toward laying to rest the turmoil over its acquisition of the British software maker Autonomy by settling three shareholder lawsuits over the deal.

Now, a former chief financial officer of Autonomy is seeking to block that move.

In a motion filed in Federal District Court in San Francisco, the executive, Sushovan Hussain, sought a judge’s intervention to block the proposed settlement between HP and some shareholders. According to Mr. Hussain, the pact would effectively clear away any chance to uncover just what happened in that disastrous acquisition.

“By this settlement, HP seeks to forever bury from disclosure the real reason for its 2012 write-down of Autonomy: HP’s own destruction of Autonomy’s success after the acquisition,” the executive wrote in a court filing. “And by the broad bar order it seeks, HP seeks to absolve itself of its own responsibility for its losses.”

It is the latest twist in a tumultuous re-examination of the roughly $11 billion acquisition. In November of 2012, HP announced that it would take an $8.8 billion accounting charge, more than half of which stemmed from what the computer giant said were artificially — and intentionally — inflated financial statements.

As expected, shareholders eventually filed suit against HP. Last month, Hewlett-Packard agreed to settle three lawsuits in unusual fashion. Shareholders will receive nothing. But their lawyers at Cotchett, Pitre & McCarthy and Robbins Geller Rudman & Dowd will be paid at least $18 million over the next 32 months, in exchange for helping HP continue to pursue claims against former Autonomy executives, including Mr. Hussain.

In a court filing, lawyers for Mr. Hussain argue that Hewlett-Packard is the big winner, since the settlement would essentially prevent shareholders — including their client — from pressing forward with claims against company management or directors. Autonomy executives, like its founder, Mike Lynch, have consistently argued that they did nothing wrong and that the real culprit was mismanagement by HP after the takeover.

The motion takes aim at the pact, which Mr. Hussain contends shows a curious turnaround by the plaintiffs’ lawyers.

“At a September 2013 hearing, plaintiffs’ counsel argued that HP’s attempts to refocus the investigation on Legacy Autonomy Officials was an irrelevant distraction,” he writes. “Now, suddenly, plaintiffs’ counsel do a total about-face, buying the very story they rejected last year.”

Elsewhere in the complaint, he scoffed: “Any normal person would say, ‘Are you kidding me?’ A federal district judge, who is required to rule on the fairness of the settlement and make sure that it is not collusive, should say, ‘Not in my court.’”

A spokesman for HP said in a statement: “Mr. Hussain’s opposition to the settlement is baseless. We look forward to the day when a jury gets to hear the evidence of Mr. Hussain’s conduct. We strongly believe that at the end of the process, the jury will conclude that Mr. Hussain engaged in a multibillion-dollar fraud.”

A spokesman for Mr. Lynch said in a statement:

This motion reveals the depth of the corruption that permeates the settlement. The lawyers who spent more than a year documenting the errors and misrepresentations of HP executives in their acquisition and integration of Autonomy have been bought off by the promise of tens of millions of dollars. HP and its executives, who squandered billions of dollars and produced a report whitewashing the whole affair, avoid answering a single question. And the shareholders who have borne the losses get nothing, and learn nothing about what really happened. Three years on, shareholders deserve more than this, they deserve answers.


Here’s a copy of Mr. Hussain’s filing:

Autonomy CFO's Move to Block H.P. Settlement