Former HP boss Meg Whitman accused of 'trashing' Mike Lynch's reputation to protect herself

'Things have to be proven' in the court, the judge told Whitman

In the second day of her testimony at London's High Court, Meg Whitman, the former CEO of Hewlett-Packard, was accused of publicly trashing the reputation of Autonomy founder Mike Lynch.

Whitman was also a member of the HP board that approved the deal masterminded by her predecessor as CEO, Léo Apotheker.

On Thursday, Robert Miles, a lawyer for Lynch, clashed with Whitman during her testimony at the $5.1 billion trial and asked Whitman why she went public with fraud claim without seeking any explanation from Lynch or Autonomy's auditor Deloitte if she had found issues with the company's financial accounting.

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Miles told the court that Whitman had not carried out "proper calculations" over an $8 billion write-down on the Autonomy acquisition and had no idea whether the fraud had occurred in the deal.

"It was about protecting and reinforcing your reputation and you were doing so at the expense of Dr Lynch and (former CFO) Mr Hussain," Miles suggested to Whitman, according to Reuters.

"That's not correct," she replied. "We were not trashing someone's reputation. We were reporting the facts as we knew them and we had been defrauded by Autonomy."

We were not trashing someone's reputation. We were reporting the facts as we knew them and we had been defrauded by Autonomy

Responding to Miles' question why she didn't question Lynch about accounting irregularities, Whitman said: "I don't know why we would ask a fraudster why he had committed fraud."

"We had been a victim of significant fraud," she added.

"No, you had an allegation of fraud," Miles replied. "And it's nothing more than that and you know it."

"Well, I don't believe that's the case," Whitman stated. "We knew exactly what had gone on here."

At this point, Judge Robert Hildyard, who was listening to the exchange, interrupted Whitman. "Then I wouldn't have anything to do, would I?" the judge said.

"I'm sorry?" muttered Whitman, to which the High Court judge replied: "Things have to be proven."

In March, the case against Mike Lynch opened in London, with successor company Hewlett Packard Enterprise (HPE) accusing Lynch (and ex-CFO Sushovan Hussain) of fraudulently inflating Autonomy's valuation prior to its sale to HP.

The two men, however, deny the allegations. Lynch has counter sued HP, saying that HP's mismanagement damaged the value of Autonomy.

Whitman was a member of HP's board when the $11.1 billion deal was announced in August 2011. But, in September 2011, HP removed CEO Léo Apotheker from his post and Whitman was appointed as the new CEO of the company.

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About a year later, HP registered a $8.8 billion write-off, $5 billion of which was put down to misrepresentation, accounting improprieties, and disclosure failures at Autonomy.

Whitman told the London High Court on Thursday that she ordered an internal investigation into Autonomy in mid-2012 after a whistle-blower informed them that Autonomy's management had artificially inflated the company's revenues and profit margins.

Whitman said that she had relied on information provided by Cathie Lesjak, HP's former finance director, who had claimed that the major part of the $8 billion write-down was because of the alleged fraud at Autonomy.

In the US, Lynch faces 17 criminal charges of fraud linked to the Autonomy deal. Last month, a court in San Francisco, California ordered five-year prison sentence to Hussain for accounting fraud.

The High Court in London has been informed that Hussain will not give evidence in the current trial.

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