Business News

Autonomy's Lynch: No 'smoking gun' in HP $5B claim

British IT entrepreneur Mike Lynch said Hewlett-Packard had failed to produce a "smoking gun" to back its claim that he masterminded a complex fraud to inflate the value of Autonomy by as much as $5 billion before HP bought it in 2011.

The U.S. company is suing Autonomy founder Lynch and former Autonomy finance director Sushovan Hussain in London for in excess of $5 billion in damages over their management of Autonomy, the company it acquired for $11.7 billion.

Lynch said the contents of HP's claim were "a simple rehash of previous leaks and insinuations that add up to one long disagreement over accounting treatment".

"After three years of (HP CEO) Meg Whitman's stonewalling, is this it?," he said in a statement. "HP's claim is finally laid bare for what it is -- a desperate search for a scapegoat for its own errors and incompetence."

Mike Lynch
Chris Ratcliffe | Bloomberg | Getty Images

HP said in its court filing it believed it was acquiring a rapidly growing software company that was gaining market share, but it turned out that Autonomy was not growing nearly as quickly as it appeared and was losing market share.

As a result, it said it had overpaid for the Cambridge-based software group by at least 3.2 billion pounds, equivalent to about $5 billion.

HP said it had served its claim against Lynch and Hussain in London on April 17.

"Lynch and Hussain caused Autonomy group companies to engage in improper transactions and accounting practices," it said, adding that gross and net profits had been overstated.

Lynch has denied HP's claim, saying that the loss of value was caused by HP's own incompetence and mismanagement. Hussain, who has a separate legal team, has not commented publicly.