The former CEO and a former finance executive of Autonomy have been charged with lying about the U.K. software company’s financial condition before it was taken over by Hewlett-Packard in 2011.

The U.S. federal indictment of ex-CEO Mike Lynch and Stephen Chamberlain, who served as Autonomy’s vice president for finance, comes seven months after former CFO Sushovan Hussein was convicted of fraud by a San Francisco jury in connection with the $11 billion HP deal.

The Department of Justice said Lynch and Chamberlain engaged in a scheme to deceive HP about Autonomy’s financial condition and its prospects for growth by, among other things, providing HP with materially false and misleading quarterly and annual financial statements during the negotiations between the two companies.

According to the indictment, Lynch and Chamberlain also “intimidated, pressured and paid off persons who raised complaints about or openly criticized Autonomy’s financial practices and performance.”

HP wrote off nearly $9 billion of its investment in Autonomy after completing the buyout and getting a detailed look at Autonomy’s books. It is seeking $5 billion in damages against Lynch and Hussein in a civil lawsuit filed in the U.K.

Lawyers for Lynch said the charges amount to a business dispute over the application of U.K. accounting standards. “HP has sought to blame Autonomy for its own crippling errors, and has falsely accused Mike Lynch to cover its own tracks,” they said in a statement.

As BBC News reports, the sale of Autonomy to Hewlett-Packard “was trumpeted as proof positive the U.K. could grow businesses to be the envy of the world’s biggest tech giants.” But within a year, HP claimed Autonomy had misrepresented its financial health.

The U.S. indictment states that Lynch and Chamberlain inflated revenues by backdating written agreements to record revenue in prior periods and improperly recognizing revenue on contracts that were subject to contingencies.

“HPE believes that the facts uncovered during the course of this matter will further demonstrate the harm that was caused by Dr. Lynch, Mr. Chamberlain, Mr. Hussain and others to HP,” Hewlett-Packard Enterprise, the successor company to HP, said.

, , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *