Autonomy founder Mike Lynch will on Monday begin his high court defence against accusations that he perpetrated a $5bn (£3.8bn) fraud, as US prosecutors unveiled fresh criminal charges accusing the British businessman of a cover-up.
Lawyers for Lynch will start their fight in London’s high court against a civil case brought by HP’s successor companies, who allege he fraudulently inflated the value of the Cambridge-based software firm Autonomy ahead of an £8bn takeover by Hewlett-Packard in 2011. The allegations of “serious accounting improprieties” were first made in November 2012, when Meg Whitman – the former eBay chief and one-time candidate for governor of California – was chief executive of HP.
Separately, Lynch faces a maximum sentence of 25 years in prison if found guilty of the criminal charges in the US. The 17 charges include conspiracy and wire fraud. The US Department of Justice is seeking to confiscate $804m (£608m) from Lynch which it says was obtained through fraud, with a trial expected next year.
In a new US indictment, filed in a San Francisco court at the end of last week, it is alleged that Lynch and Stephen Chamberlain, a former Autonomy executive, conspired to cover up fraud, including by destroying documents, “paying hush money” to former Autonomy employees, and laundering the proceeds of the deal with HP.
Lynch strongly denied all of the allegations. A spokesperson said: “These are baseless, egregious charges issued on the eve of the trial in the UK, where this case belongs, and Dr Lynch denies them vigorously.”
- 21 March 1996 Autonomy is incorporated.
- November 2000 Autonomy starts trading on the London Stock Exchange’s main market.
- Q1 2009 The start of the period in which Mike Lynch and Sushovan Hussain allegedly made improper transactions and accounting.
- January 2011 Lynch and Hussain allegedly start preparing for a sale of the company.
- 18 August 2011 Hewlett-Packard (HP) announces a bid for Autonomy.
- 27 October 2011 HP completes acquisition.
- 23 May 2012 Lynch’s contract with Autonomy is terminated.
- 20 November 2012 HP reveals an $8.8bn writedown after ‘serious accounting improprieties’ are discovered at Autonomy.
- 27 December 2012 HP reveals US Department of Justice probe into the acquisition.
- June 2014 Investors settle claim against HP executives over the Autonomy deal.
- 30 April 2018 Hussain is found guilty of accounting fraud.
- 30 November 2018 US Department of Justice announces criminal charges against Lynch.
- 25 March 2019 The high court case begins in the UK.
In a separate statement, Lynch’s lawyers, Chris Morvillo of Clifford Chance and Reid Weingarten of Steptoe & Johnson, said US prosecutors had shown a “wild west, ‘shoot first, ask questions later’ approach to investigations”. They said the allegations of hush money referred to the legal employment of former Autonomy colleagues by Lynch.
The criminal and civil cases will be closely followed in UK technology circles. Until the US charges were first announced in November, Lynch was a director of Darktrace, a fast-growing cybersecurity company. He remains a director of Luminance Technologies, a company using artificial intelligence to analyse legal documents, and Invoke Capital, a tech-focused investment company.
