US, UK probe HP claims of accounting mischief at Autonomy
Tech titan reveals fraud investigation, lawsuits
The US Department of Justice is investigating Hewlett Packard's allegations that British software company Autonomy cooked its books before it was bought up by HP.
Hewlett Packard claimed accounting irregularities and financial misrepresentation at Autonomy led to HP's $8.8bn loss in the fourth quarter of 2012. HP paid $11bn for the UK-based software service company in 2011. Hewlett Packard now believes it overpaid for Autonomy and claimed the false figures led to bad business projections also contributing to the heavy losses at HP.
HP confirmed the Department of Justice probe in its annual company report filed last week to US regulator the SEC. The tech titan said it had cooperated with investigators since 21 November. The UK's Serious Fraud Office and the US SEC are also examining the allegations against Autonomy.
HP's annual report lists ten separate legal actions launched by shareholders over the Q4 mega write down: three named Hewlett-Packard, two named former HP CEO Leo Apotheker and three cited Autonomy's founder Mike Lynch as the principal defendant.
I have nothing like the complete picture, but I can't help having a nagging feeling that HP are indulging in a bit of mud-flinging to deflect interest from their less-than-sparkling performance.
If Autonomy's alleged shenanigans were a) real and b) on such a massive scale, then surely a little due diligence on the part of HP prior to purchase would at least have raised a suspicion or two.
It's like selling a car, you let the buyer do the inspection and decide if all is well. You write "sold as seen" and if there's anything wrong then the buyer has no comeback as they missed it.
It should not be up to the seller to point out any defects since they may not realise they exist. So if Autonomy had some accounting problems which they didn't know about they how on earth can they be held liable?
Of course if they had some accountancy problems they knew about then it's a different story.
But ultimately people who run businesses in this country should build up an industry in the UK and stop selling their businesses as this screws over the UK in the long run. Yes you can be rich as a result of the buyout, but if you're running a business valued so high I'm sure you're comfortably off anyway.
I totally agree, they should have done their homework more thoroughly before signing the cheque.