MIKE Lynch, the founder of British software giant Autonomy, yesterday hit out at the chief executive of Hewlett-Packard (HP) over claims the US company had been lied to during its $11bn (£6.9bn) acquisition of Lynch’s firm last year.
The former Autonomy boss, who was forced out of HP in May, denied any wrongdoing, rejected claims that Autonomy’s figures had been inflated, and said he had been made a scapegoat for HP’s failures.
His comments, made in a series of interviews yesterday, painted a vastly different picture of the reasons for HP’s $8.8bn Tuesday writedown over the Autonomy acquisition, which had come alongside a disappointing set of results and had pushed the US company’s shares down to decade lows.
HP boss Meg Whitman had accused former management at the firm of “serious accounting improprieties” and a “willful effort...to inflate the underlying financial metrics”, but Lynch yesterday rebuffed the allegations and accused Whitman of “grabbing for straws”.
“This is a company that has delivered its worst results in years and I’m not going to be HP’s scapegoat for a company that’s in utter disarray,” Lynch told Sky News yesterday.
“HP came in with about 300 people, crawled over everything and found nothing wrong. And you know why? Because there was nothing wrong.
“The writedown is due to them destroying value, they have mismanaged Autonomy,” Lynch said, adding that he had not been informed of the allegations until HP’s statement was released on Tuesday.
The US company’s shock writedown was largely attributed to Autonomy allegedly inflating revenue and profit figures, something which HP had apparently not noticed when it pored over Autonomy’s books before buying it in October last year. But Lynch strongly denied that his firm had doctored the figures. He told Channel 4: “I totally reject that allegation. Autonomy has always been very clear about its accounting and what we have done is make sure that we have always been transparent.”
He said that a change in culture at HP under Whitman, who was drafted in following the departure of Leo Apothekar shortly after the deal, was responsible for Autonomy’s disappointing performance since the deal, the exit of many senior staff, and Tuesday’s writedown.
“What has happened since [the deal] is that the business has been very badly mismanaged, much of the talent has left and that has led to the business being written down. They have got to open up to the fact that they, in a year, destroyed value which was created over 10 years,” he said.
Lynch, who founded Autonomy in 1996, took it public in 2000, and pocketed £500m from its sale, said he would consider his options regarding a formal response “as soon as we get some detail”.
His comments came as his firm’s former auditor Deloitte moved to distance itself from the situation. “Deloitte categorically denies that it had any knowledge of any accounting improprieties or misrepresentations in Autonomy’s financial statements. We conducted our audit work in full compliance with regulation and professional standards,” it said.
Whitman had said on Tuesday that HP had scrutinised the accounts audited by Deloitte when conducting due diligence on the deal. “Deloitte is not exactly ‘Brand X’ accounting firm. It would be a little challenging to go in and assume: ‘Hey we’ve got to double-check Deloitte’,” she had said.
It also emerged yesterday that the matter was being investigated by the Federal Bureau of Investigation, which is working with the US Securities and Exchange Commission.
HP did not comment yesterday.