LONDON: A British judge said on Friday that Mike Lynch masterminded an elaborate fraud to inflate the value of his company Autonomy before it was bought by Hewlett-Packard for $11 billion in 2011.
Finding in HP’s favour following a near decade-long battle, Justice Robert Hildyard said the Silicon Valley company had won the majority of its case although the damages, while substantial, would be significantly smaller than the $5 billion demanded by the U.S. firm.
The court’s decision comes before a Friday deadline for Britain to decide whether or not to extradite Lynch to the United States to face criminal charges over the deal that carry a maximum term of 20 years.
“The claimants have substantially succeeded in their claims in these proceedings,” Hildyard told the High Court, in a summary of his much longer judgement, following a nine-month trial and a two-year wait for his decision.
“Quantum will be determined in a later judgment, but I would anticipate that, although substantial, it will be considerably less than claimed.”
HP had sued Lynch, arguing that he had fraudulently inflated the value of Autonomy before he sold it to the US tech giant. Lynch had argued that HP mismanaged the acquisition. Judge Hildyard said Lynch and his finance director Sushovan Hussain had fraudulently concealed the sale of hardware and engaged in convoluted reselling schemes to mask a shortfall in sales of Autonomy’s software, the business HP coveted.
That enabled Autonomy to meet quarterly financial forecasts and maintain its high share price.
EXTRADITION DECISION IMMINENT
Lynch faces separate criminal charges in the U.S., including wire fraud and securities fraud over the Autonomy sale. A year after acquiring Autonomy, HP threw out its CEO who was the architect of the deal which was supposed to help transform the computer and printer maker, one of Silicon Valley’s oldest companies, into a more profitable business software and services group.
It wrote down the value of Autonomy by $8.8 billion and sought damages from Lynch and his colleague Hussain. Hussain was convicted of fraud and handed a five-year prison sentence in the United States in 2019. HP said in a statement that Lynch and Hussain had deliberately misled the market and Hewlett-Packard Enterprise. “HPE is pleased that the judge has held them accountable,” a spokesman said after the London court ruling.
Lynch has denied all the allegations. He was not immediately available to comment via his representatives. Lynch is due to hear on Friday whether Britain’s interior minister Priti Patel has approved the extradition request.
A court has given Patel until midnight to make a decision, although Lynch could appeal any ruling that goes against him. The U.S. charges carry a maximum term of 20 years imprisonment.
Comments
Comments are closed.