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Details of HP Lawsuit Against Autonomy Executives Emerge
LONDON — New details emerged on Tuesday in Hewlett-Packard’s $5.1 billion lawsuit against two former top executives at Autonomy, the British data intelligence company that HP acquired in 2011 for $11 billion.
The American tech giant and Michael Lynch, Autonomy’s founder, have been engaged in a lengthy legal battle over accusations of financial misconduct at the British company before HP completed the multibillion-dollar takeover.
The lawsuit was filed in British courts in late March, but details of it were made public only on Tuesday. It is the first time HP has taken direct legal action against Mr. Lynch for what it says were accounting abuses at Autonomy.
In the documents, HP accused Mr. Lynch and Sushovan Hussain, Autonomy’s former chief financial officer, of artificially inflating the company’s revenue, while overstating Autonomy’s growth rate and profits.
HP’s lawsuit also says that the activities of the former Autonomy executives led to a false representation of the British software company’s financial health, which forced HP to pay more than it was worth.
The acquisition has been seen as a disaster for HP since the tech giant was forced to write down $8.8 billion from the deal in 2012. The $5.1 billion legal claim is one of the largest ever brought against an individuals in Britain.
HP bases the claim on a $4.6 billion charge linked to the alleged financial misconduct, roughly $400 million connected to shares given to Mr. Lynch and Mr. Hussain and a further $100 million loss associated with Autonomy that was suspected of being caused by the former executives’ activities, according to the British court documents.
In a sharply worded rebuttal, Mr. Lynch, who has consistently denied any wrongdoing, said that Autonomy’s accounting practices had been fully approved by external auditors and that HP’s accusations were without merit.
He added that the legal dispute was an attempt by Meg Whitman, HP’s chief executive, to blame others for the American company’s much-maligned takeover of the British firm.
“After three years of Meg Whitman’s stonewalling, is this it?” Mr. Lynch said in a statement. “HP’s claim is finally laid bare for what it is: a desperate search for a scapegoat for its own errors and incompetence.”
Mr. Lynch’s lawyers, in a lengthy response to HP, contended that it was the American company’s own activities, not those at Autonomy, that caused the takeover to fail.
A number of American government authorities, including the Securities and Exchange Commission and the Justice Department, are still considering whether to bring charges related to the Autonomy acquisition.
The Serious Fraud Office of Britain announced this year that it had closed its own investigation into suspected accounting and disclosure abuses related to the deal.
Representatives for Mr. Lynch said that he would sue HP for “loss and damage caused by false and negligent statements” for as much as $150 million in a British lawsuit that is expected to be filed by early June.
Legal experts, however, say that the cases brought by both HP and Mr. Lynch in British courts will not be heard before early next year.
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