GO
Loading...

Was Autonomy Founder Aware of Accounting Problems?

Former Autonomy founder and CEO Michael Lynch was interviewed by Autonomy's new owner, Hewlett-Packard about specific transactions at his former company, sources told CNBC Wednesday.

Mike Fuentes | Bloomberg | Getty Images

Lynch denied one key detail of the meeting and said that questions were "sprung on" him at a meeting to discuss his gardening leave, a spokeswoman for the former Autonomy boss told CNBC.

According to sources close to the investigation, Lynch was interviewed last June about specific transactions at Autonomy during HP's nearly seven-month long investigation.

If true, the information raises questions about how much Lynch knew about the problems at the software firm before they became public on Tuesday. In the wake of HP's announcement, Lynch said he had been "ambushed" by the news and was "shocked" by the allegations of accounting improprieties that forced HP to take an $8.8 billion charge.

HP CEO Meg Whitman, who fired Lynch after the company acquired Autonomy last year, said HP was "misled" about Autonomy's financial health.

Lynch, in turn, faulted the technology giant for the problems. (Read More: Autonomy Founder 'Shocked' by HP Allegations of Fraud.) He has admitted one of the allegations, that Autonomy sold computer hardware at a loss to some of its customers and classed some of it as a marketing expense in its accounts, but said that this had been cleared by its accountant. This issue had been flagged by analysts before the transaction. (Read More: Analysts Questioned Autonomy's Accounting Years Ago)

HP sources added that he and other former Autonomy employees were asked about the practices that forced HP to declare the firm had engaged in a "willful effort" to deflect attention from Autonomy's poor financials.

Lynch's spokeswoman said that he had attended the meeting in question by himself, with no other Autonomy employees, and that a couple of questions about a transaction from two years previously were "sprung on" him by John Schultz, HP's general counsel. According to sources close to the investigation, Lynch's replies were generally vague or unhelpful.

Deloitte, the accounting firm that audited Autonomy prior to its acquisition by HP, said that it "categorically denies that it had any knowledge of any accounting improprieties or misrepresentations in Autonomy's financial statements."

Deloitte added that audit was conducted in "full compliance with regulation and professional standards." (Read more: In HP-Autonomy Fiasco, 15 Advisers and No Advising.)

David Faber and Catherine Boyle provided reporting for this story.

Contact Technology

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Squawk Alley