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HP lobbied British government ministers over its disastrous Autonomy acquisition

David Cameron and George Osborne targeted in HP lobbying campaign over Autonomy

David Cameron and George Osborne were among the targets of PR and lobbying campaign by HP after its disastrous acquisition of Autonomy went horribly wrong, according to documents revealed in the High Court in London today.

The documents were released as part of the civil case between HPE - the successor company to Hewlett-Packard - and Autonomy's founder and former CEO Mike Lynch, and its former chief financial officer Sushovan Hussain.

Autonomy founder Mike Lynch claimed in court today that he has been made the scapegoat by Hewlett-Packard following the mess it made of its $11 billion acquisition. The fraud claims are part of a campaign waged by HPE to try and cover up its mismanagement, he added.

Lynch was testifying in his own defence against a civil case brought in the High Court in London by HPE. It is seeking $5 billion in compensation from Lynch, claiming that Lynch and Hussain were responsible for an accounting fraud that inflated the company's revenues.

Hussain also denies any wrongdoing, but was found guilty of accounting fraud in the US in April 2018. He will be sentenced in May 2019. Several counts of fraud have also been levied against Lynch in an indictment in the US, first filed in November 2018 - based on Hussain's evidence - and updated last Friday with three new charges.

Within a year of the acquisition, HP had written-down the value of the acquisition by $8.8 billion, after Meg Whitman had taken over as CEO from Leo Apotheker, the executive who had masterminded the acquisition. Whitman had been a member of the board of directors that had approved the deal.

After two days of evidence from HPE on Monday and Tuesday this week, it was the turn of Lynch and Hussain to mount their defence today.

Robert Miles QC, Lynch's barrister, claimed that in its opening evidence HPE had only highlighted a handful of historic deals, and not provided any proof of a systematic or large-scale fraud - despite the amount of money and effort it had spent trying to prove its claims.

"All the deals now attacked were real commercial deals with real counterparties. The suggestion that Dr Lynch was in the business of conning HP is unreal," Miles told the Court. "HP, on the other hand, was a vast but floundering company."

In addition to the 80 per cent write-down on the value of the Autonomy assets just a year after taking it over, the company later divested itself of its software assets in a spin-merge with Micro Focus, including the Autonomy software assets, in a deal completed in September 2017.

"Autonomy was left as HP's unwanted stepchild," said Miles, according to Reuters.

In addition to pursuing Lynch for damages and persuading authorities in the US to charge both Lynch and Hussain for fraud, HP also lobbied the British government "to preserve the credibility" of the company, according to The Register's Gareth Corfield, who has been reporting from the High Court this week.

Chancellor George Osborne and ministers in the Department for Business, Innovation and Skills were also on the receiving end of HP's lobbying efforts, code-named Project Sutton, and published online by The Register.

Yesterday, before bringing their opening arguments to a close, HPE's barrister had asserted, once again, that Autonomy's accounting practices were fraudulent - with founder and CEO Mike Lynch, as well as chief financial officer Sushovan Hussain, responsible.

Responding to questioning by Justice Robert Hildyard, Rabinowitz insisted that Autonomy's accounting practices had been designed to give a false impression of growth and, therefore, to deceive investors and potential buyers.

Rabinowitz was responding to suggestions from Justice Hildyard, presiding over the case, that Autonomy's accounting may well have been "inappropriate", but possibly fell short of outright fraud.

"No, I think what we're saying is that it was fraudulent," said Rabinowitz.

The Serious Fraud Office has already examined Autonomy's accounts and concluded that there was insufficient evidence to press ahead with a prosecution.

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HP lobbied British government ministers over its disastrous Autonomy acquisition

David Cameron and George Osborne targeted in HP lobbying campaign over Autonomy

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