Mike Lynch, the founder and former CEO of Autonomy, has defended himself against claims by HP CEO Meg Whitman that Autonomy had engaged in accounting practices that painted a misleading picture of Autonomy's business.
HP bought Autonomy in October 2011 for $11.1bn (£7bn). Lynch left the company in May 2012 after HP grew dissatisfied with lacklustre sales growth. Shortly after Lynch's departure, according to Whitman, an internal "whistle blower" came forward alleging that Autonomy had engaged in dubious accounting practices that had artificially inflated the growth of the company's software.
But in a series of interviews, Lynch has hit back. He described HP's allegations as "utterly wrong" and that the first time he was made aware of the allegations was when HP issued its press release to coincide with its fourth quarter and full-year results.
"We were audited on a quarterly basis," Lynch told the Wall Street Journal. "It was Deloitte who knew the company well. We had 10 years as a listed company; during that time Deloitte would have had their work reviewed by the various boards. Of course HP did what its senior management called 'a meticulous due diligence' involving hundreds of people that was highly intense, involving KPMG and Barclays as well. They threw everything at it."
He added: "It does seem to be coincident with them releasing the worst set of results in their 70-year company history. I think what has happened here is that they have got themselves in a mess. They did the acquisition of EDS, they had to write that one down. They had to write Palm down.
"When Autonomy was acquired it was done by a CEO who wanted to get rid of various divisions of that business and lead with software. He was ousted in an internal coup d'etat. From that point Autonomy was at odds with the divisions that were in power.
"There was a series of mismanagement steps. They lost hundreds of the talented people at Autonomy. The whole management team basically went out of the door. Sadly they are left with the results of having destroyed all that value," said Lynch.
He added that Autonomy was in poor shape by the time he left at the end of April due to many of the interventions of HP and what Lynch calls "the petty infighting at HP". That had provoked many of Autonomy's top staff to leave.
"HP came in with about 300 people [to conduct due diligence prior to the acquisition], crawled over everything and you know what? They found nothing. And you know why? There was nothing to find," he told Jeff Randall Live on Sky News. "What actually happened is that they mismanaged Autonomy and in doing that destroyed a lot of shareholder value."
Accusing Whitman of trying to deflect attention from a series of M&A blunders culminating in a disastrous set of fourth quarter and full-year financial figures, Lynch added: "HP was once a great company. If that business can get back to its core and fix itself then I think Autonomy will have a good future. HP needs to stop trying to deflect attention away from itself."
On Tuesday, Whitman said that the UK's Serious Fraud Office and the Enforcement Division of the Securities and Exchange Commission in the US have both been called in – although Autonomy was never listed in the US. But Lynch says that he has yet to be contacted by either agency.
Whitman, though, says that she plans to pursue Lynch and others for compensation for HP over the claims.
"This appears to have been a wilful effort on behalf of certain former Autonomy employees to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers.
"These misrepresentations and lack of disclosure severely impacted HP management's ability to fairly value Autonomy at the time of the deal," claimed the company in a statement.