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HP is not moved by Dr. Lynch's "open letter"

New CEO Meg Whitman and the top brass at Hewlett-Packard Comp. (HPQ) show no signs of backing down from allegations that Autonomy's former owners committed approximately $5B USD in accounting "improprieties", which they suggest amount to fraud.  Even as Autonomy's former CEO, co-founder, and co-owner Dr. Mike Richard Lynch fired back with an open letter and media interviews regarding errors in HP's accusations, HP has released a new statement making it abundantly clear that it feels it is in the right and plans to press potential criminal penalties via regulators.

In the statement HP acknowledges for the first time officially that UK regulators and their counterparts at the U.S. Federal Bureau of Investigation/U.S. Security and Exchange Commission are investigating Autonomy as rumored.  The company writes:

The matter is in the hands of the authorities, including the UK Serious Fraud Office, the US Securities and Exchange Commission’s Enforcement Division and the US Department of Justice, and we will defer to them as to how they wish to engage with Dr. Lynch. In addition, HP will take legal action against the parties involved at the appropriate time.

It adds menacingly:

While Dr. Lynch is eager for a debate, we believe the legal process is the correct method in which to bring out the facts and take action on behalf of our shareholders. In that setting, we look forward to hearing Dr. Lynch and other former Autonomy employees answer questions under penalty of perjury.

That statement would certainly seems, in a roundabout way, to accuse Dr. Lynch of engaging in further obfuscation/lies in his public statements.
 

HP suggests ex-Autonomy Corp. CEO, Dr. Mike Lynch, is risking perjuring himself if he repeats his current statements. [Image Source: HP]

The battle between HP and Autonomy's former employees/owners is an intriguing one as it also pits two of the world's largest accounting firms against each other.  Autonomy's accounting was done by Deloitte LLP, which in a comment to Reuters stated, "[All Autonomy accounting was done] in full compliance with regulation and professional standards."

But according to HP's own accounting super-power, PricewaterhouseCoopers LLP, forensic audits confirmed grave accounting malfeasance in Autonomy's books.

By the sound of it, the pair is headed on a collision course both in civil court, and potentially in criminal court if UK or U.S. officials determine criminal charges are warranted.

Autonomy poster
HP claims it was blindsided by Autonomy's "hidden" downsides. [Image Source: Autonomy]

The pending battle is a big risk for HP.  While it faces serious image damage in the eyes of consumers by bringing attention to the ugly mess, the move does have a potential payoff to shareholders if HP can win back some of the billions it lost on the purchase in court.  However, should HP's claims be invalidated, the company could see all that image damage be for naught, a nightmarish scenario in which both shareholders and corporate image would suffer.

Sources: HP, Mike Lynch via the WSJ [PDF]



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RE: Let buyer beware?
By Schadenfroh on 11/28/2012 6:45:58 PM , Rating: 2
quote:
They knew what they were doing

I assume "they" are the shareholders of Autonomy when "they" laughed all the way to the bank?


RE: Let buyer beware?
By rdhood on 11/29/2012 9:54:05 AM , Rating: 2
"They" are HP management, who knew that they were paying too much for Autonomy.


"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA














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