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The former chief financial officer of Autonomy – the company that HP acquired for $11-billion in 2011 – has been indicted in the US on felony fraud charges.
Federal prosecutors claim that Sushovan Hussain and others were involved in a fraudulent scheme to “deceive purchasers and sellers of Autonomy securities and HP about the true performance of Autonomy’s business, its financial condition, and its prospects for growth”.
HP bought Autonomy for $11-billion but later said the company had overstated its financial health ahead of the acquisition – going as far as to say that $5-billion of the purchase price was effectively fraud.
In November 2012, HP said it had uncovered “accounting improprieties, disclosure failures, and outright misrepresentations” in Autonomy’s historical financials that may have inflated the price that HP paid to acquire the company.
At that time, president and CEO Meg Whitman disclosed that HP had taken an $8,8-billion non-cash impairment charge related to Autonomy.
“The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures, and outright misrepresentations that occurred prior to HP’s acquisition of Autonomy and the associated impact on the expected financial performance of the business over the long term,” she said.
Whitman said the improprieties had been discovered through an internal investigation after a senior member of Autonomy’s leadership team came forward following the departure of Mike Lynch in May 2012.
The charges were initially investigated in the UK, but in January 2015, the Senior Fraud Office (SFO) dropped the investigation, saying it found “insufficient evidence for a realistic prospect of conviction”.
However, it handed over its files to the US Department of Justice, which continued the investigation and has now made the indictment.