Former Autonomy CFO indicted in USA for misleading investors
Grab some popcorn, trans-national forensic accounting fans. Both of you
Updated The long-running spat between HP and the company formerly known as Autonomy has taken another turn, with Autonomy's former chief financial officer Sushovan Hussain indicted in a San Francisco court last week.
The move was immediately criticised by a collective of former Autonomy executives as the Department of Justice (DoJ) “lending its support to HP's attempts to blame others for its own catastrophic failings”.
Catastrophic isn't too far from the truth. Readers will remember that HP paid US$10.7 billion to buy the company in 2011 and in 2012 wrote down the acquisition by a breathtaking $8.8 billion. Cue shareholder lawsuits that saw the situation turn personal: Hussain filed to prevent HP from settling those actions in 2014, and HP responded by with a civil case against him.
After it was split into two companies, the HP Enterprise business clawed back $8.8 billion (the amount of its 2012 write-down), by announcing a “spin-merge” with the UK's Micro Focus that would inherit Autonomy code as well as big data, security, and IT management.
Reuters says the US indictment accuses Hussain of “conspiracy and wire fraud”, misleading investors about Autonomy's performance and prospects.
The response by his lawyer, John Keker, says Hussain “is a UK citizen who properly applied UK accounting rules for a UK company. This issue does not belong in a US criminal court.”
Keker's statement continues: ”It’s especially galling that the Justice Department is pursuing this case on behalf of HP, a company that went out of its way to employ a web of offshore shell companies to acquire Autonomy with the specific intent of avoiding payment of US taxes.”
Hussain remains in the UK, so if the DoJ's case is to proceed, it would have to put extradition proceedings in place. ®
"HPE is pleased with the news that a federal Grand Jury has returned an indictment in this matter, alleging that Sushovan Hussain and others acted with fraudulent intent," said HPE executive Vice President, General Counsel John Schultz in a statement.
"This is a significant step toward holding Mr. Hussain accountable for his outright fraud and deliberate misrepresentation."