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UK Serious Fraud Office queues up to probe HP's Autonomy allegations

...using Autonomy's own software

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The UK Serious Fraud Office has told The Register it is investigating allegations of accounting irregularities at Autonomy, the Brit software house gobbled by HP for $10.7bn in 2011.

In November last year, Hewlett-Packard claimed Autonomy "outright misrepresented" its value in the months before its acquisition, causing HP to take a $8.8bn financial hit at the end of 2012. Hewlett-Packard then contacted the US Securities and Exchange Commission (SEC) and the UK Serious Fraud Office (SFO), and said it intended to file criminal and civil charges where appropriate to "seek redress for HP shareholders".

The SFO, a government department that answers to the attorney general, confirmed today that it launched a probe into Autonomy on 6 February. HP told investors in a 10-Q filing to the SEC, published on Monday, that it is cooperating with Blighty's fraud busters.

Until now the SFO was merely examining the allegations against Autonomy; HP believes the British search software maker inflated its value by $5bn. These claims were rejected by Autonomy co-founder and former chief executive Mike Lynch, who denies any wrongdoing.

But the UK’s complex corruption investigators may step aside due to a potential conflict of interest: the office uses Autonomy’s Introspect software for document management.

“The SFO is keen to ensure that there is now no conflict of interest or perception of such a conflict, and it is obliged as a first step to make inquiries to ensure that it can continue as the investigating body. It is undertaking this work at present,” the SFO said in a statement.

The US Department of Justice is also scrutinising HP's claims against Autonomy. According to the PC maker, writing in its 10-Q filing:

HP has provided information to the UK Serious Fraud Office, the US Department of Justice and the SEC related to the accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred prior to and in connection with HP's acquisition of Autonomy.

“On 6 February, 2013, representatives of the UK Serious Fraud Office advised HP that they had also opened an investigation relating to Autonomy.

So far there’s been no word of the SFO inquiry on the AutonomyAccounts.org website set up by Lynch in December to counter HP’s allegations. The most recent announcement, posted on 11 February, is a response to the news that the UK’s Financial Reporting Council (FRC) will inspect the Brit software company's accounts. ®

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