Ex-Autonomy CFO pleads not guilty to charges he inflated the company's value

Legal fallout from the ill-fated $11bn HP takeover continues

A businessman in handcuffs

The ex-chief financial officer of Autonomy, Sushovan Hussain, has pleaded not guilty to charges he inflated the price of his company's $11bn (£9bn) acquisition by Hewlett-Packard.

It is the latest development in the ongoing legal spat after HP wrote down the acquisition by a staggering $8.8bn (£7.1bn) in 2012, a year after the ill-fated deal.

Hussain, who is a UK citizen, entered his plea yesterday in the Northern District of California, San Francisco.

He is accused of "conspiracy and wire fraud", misleading investors about Autonomy's performance and prospects.

The indictment was filed on 10 November, 2016, and alleges that HP relied on the accuracy and truthfulness of the statements and disclosures when considering whether to buy Autonomy and at what price.

Hussain's lawyer had previously said that Hussain properly applied UK accounting rules for a British company, and therefore the "issue does not belong in a US criminal court".

A filing earlier this week from government prosecutors said it "continues to investigate the involvement of other persons and the possibility of other offenses arising from the facts and circumstances of this case".

The UK's Serious Fraud Office also investigated the sale of Autonomy but closed its probe due to "insufficient evidence".

However, HP is seeking damages of $5.1bn (£4.2bn) against Hussain and co-founder Michael Lynch in London's High Court court, alleging that they engaged in fraudulent activities while executives at Autonomy.

Christopher Egan, former chief executive officer of Autonomy's US-based subsidiary, settled an administrative proceeding in which the Securities and Exchange Commission alleged that Egan had participated in what it described as a "fraudulent" accounting scheme allegedly orchestrated by Autonomy's most senior UK executives.

An HPE spokesman said: "HPE is pleased with the news that a federal Grand Jury returned an indictment in this matter. This is a significant step toward holding Mr Hussain accountable for his alleged role in defrauding HP, and we look forward to him answering for his actions in court." ®

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