MIKE LYNCH DEFENDS HIMSELF IN US AUTONOMY TRIAL
Released On 13th Jun 2024
Mike Lynch, co-founder of tech business Autonomy, has been defending himself in court in San Francisco against charges of wire fraud, securities fraud and conspiracy relating to his company’s acquisition deal with Hewlett Packard.
Autonomy, which was founded in 1996, grew to be one of the UK’s biggest companies and was bought by the American tech giant in 2011 for more than $11 billion (£8.6 billion).
However, just a year later, Hewlett Packard wrote down the value of Autonomy by $8.8bn and claimed it had been duped into overpaying for the business, alleging that Dr Lynch had inflated Autonomy’s sales, misled investors and other potential buyers.
Legal battles soon began and in April 2015, HP sued Dr Lynch in the High Court along with his Chief Financial Officer, Sushovan Hussain, seeking $5 billion in damages.
Dr Lynch immediately countersued for $160 million, saying that the American company had ruined his reputation and that it was their “incompetent” operation of Autonomy that had led to the acquisition’s failure.
In the years that followed, during which time Mr Hussain was sentenced to five years in jail in the US in 2019, Dr Lynch fought hard to avoid extradition but was eventually extradited to the US in May 2023 and confined to an address in San Francisco under house arrest.
He was also ordered to pay a $100 million (£79m) bond and is watched by 24-hour armed guards he must pay for himself. In his defence last week, Mr Lynch said that he had left others in charge of the business dealings because his focus was purely on the tech, refuting the prosecution’s claims that he was the “driving force” behind the sale. He also said he had found the trial “surreal”, involving “a parade of witnesses” – he claims to have never met – describe decisions in which he had no involvement.
Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Forensic accountants are often instructed following business sales in which the buyer and seller have fallen out after completion. In some cases, the Sale and Purchase agreements specifically provide for an accountant to determine specific issues in the event of a disagreement.
“These issues typically involve the payment of deferred or contingent consideration or the preparation of so-called Completion Accounts, being the accounts of the company being sold to the date of sale.
“Accounts are always prepared retrospectively so, if a company were to be sold on, say 31 January 2024, it would be impossible to have accounts to 31 January 2024 available at the date of sale with a 31 January 2024 balance sheet. For that reason, it is recognised that retrospective adjustments may be required once the Completion Accounts have been prepared.
“These can often be a source of dispute. It is also common for Sellers to accuse Buyers of mismanagement, but few such allegations are on the scale of the Autonomy case.”
Sources: Guardian
