Come and buy my business. It's worth £10 billion, honest. Trust me. No, don't bother doing anything like checking the books yourselves, it'll just tire you out.
The ex-chief financial officer of Autonomy, Sushovan Hussain, has pleaded not guilty to charges he inflated the price of his company's $11bn (£9bn) acquisition by Hewlett-Packard. It is the latest development in the ongoing legal spat after HP wrote down the acquisition by a staggering $8.8bn (£7.1bn) in 2012, a year after the …
.. and please send in your favourite auditors, because they did such a fine job with Autonomy.
That's the bit that has always puzzled me in this weird affair. WTF is the point of auditing a company if they cannot spot issues of this magnitude, and why are THEY are not being sued into the ground for missing this sort of discrepancy?
So, it does not matter if you follow fory local accounting laws and practices. The USA seems to have jurisdiction over you wherever you are and if you are not applying their laws, you can be sent to jail for a long time even though you have done nothing wrong in your country of residence.
Isn't it time for other countries to start applying their local laws to US companies and send their CEO's to jail?
As the US laws seem to 'Trump' you local ones, you don't have sovereignity any more. You are effectively a US Colony no matter where you are on the planet.
No, only those in the UK... Remember the UK-US extradition treaty which the UK (stupidly) signed and so made itself subservient to the US.
Digression: I'm a little surprised that all those shouting for BREXIT and "taking back sovereignty" etc. aren't also calling for the UK to rip up this treaty...
If he was acting fraudulently, as HP claims, he didn't. I have no idea who is right or wrong in this case, and don't particularly care, but I think it is safe to say that HP's case won't be "he followed accounting rules and laws governed by the UK, but did things that would be against such practices in the US so we're suing him here".
I think it is safe to say that HP's case won't be "he followed accounting rules and laws governed by the UK, but did things that would be against such practices in the US so we're suing him here".
What makes you think that? It's a favourite pastime of arseholes to sue people for libel in the UK because UK law will secure a win (or a retreat) when they'd have no chance in their own country.
In all fairness when you offer yourself up to acquisition to a US company you have to expect you might come under jurisdiction of US law. Problem is as I've said before the US legal establishment's penchant for abusing wire fraud law - they'll use it when there's no wire and no fraud involved. UK criminal justice system only really does that with terrorism legislation.
Accidentally dropped some litter on the floor whilst making a call to a relative? Wire fraud! Go directly to jail for 145 years, do not pass go.. What boggles my mind is how okay US citizens are with this stuff.
Worst part is it's all HP's fault anyway which is why the class action..
So it seems that HP bought something without looking at it with a microscope, then found that it was not quite what it thought and so sues claiming fraud.
I know plenty of people who have bought HP kit, eg printers, that HP does worse by sabotaging post sale, but that is, somehow, not fraud.
Please tell me why one is fraud and the other is not ?
PS: HP is not unique in trying to con their customers.
"So it seems that HP bought something without looking at it with a microscope, then found that it was not quite what it thought and so sues claiming fraud."
This is called blaming the victim. Buyers have some responsibility to limit possible harm, but the seller has the ultimate responsibility to not lie about what he is selling.
This is called blaming the victim.
Yes. Caveat emptor applies, particularly in non-consumer exchanges. The only scenario in which it would not apply is if the seller has a clear information advantage that would not be removed by applying effective due diligence.
I guess this case will boil down to one side arguing that it was impossible to discern this from due diligence, and one side arguing that they did everything according to law and that due diligence was not performed effectively. The cynic in me also thinks probably that one side pays US taxes, and the other side are not citizens.
> I know plenty of people who have bought HP kit, eg printers, that HP does worse by sabotaging post sale, but that is, somehow, not fraud.
I am one of those people who was burned by that bit of trickery by HP, which is why I have never bought anything by HP since. And will never by anything from them again. Ever.
I hope Mr Hussain gets away with ripping off HP, in the same way that HP got away with ripping off their customers.
Crash and burn HP.
Please tell me why one is fraud and the other is not ?
Just find a statement from HP that implied that you could use third-party ink cartridges (of the type affected by this firmware) in the HP printer you purchased that influenced your purchasing decision then you'll be able to claim fraud...
I've seen it before, overvaluing a company so that the buyer ends up being shafted with a bunch of worthless inventory, but the board members all get their 'golden parachutes'. meanwhile, most (or all) of the staff gets laid off.
One of the trickiest methods is to overvalue excess and obsolete parts, stuff you KNOW you're going to have to sell for pennies on the dollar to a scrap dealer, but it's still in the warehouse. Don't show the buyer that the _necessary_ Rev B changes will not use those parts at ALL, but instead present the "facts" that Rev A's schematic and BOM will consume them all using the forecast information you provided them to show how worth-while your company is, blah blah blah.
If the parts being scrapped happen to be _expensive_, and totally worthless as scrap, you've just grossly overvalued your company! Congratulations, you sir get a 'golden parachute', inflated stock value on purchase, and a nice cash prize for cashed in stock options!
That's kinda how it works. And since you're misrepresenting facts, it's just, plain, fraud when it happens. AND, I bet it happens *ALL* the time!
I note with interest that your entire discourse is about tangibles. Just to help your short attention span, Autonomy was a software company which makes valuation by default a bit more tricky, which ought to have ensured the auditors paid attention to any artificially inflated values.
But they didn't. And didn't get sued. Which makes me wonder what exactly they discovered at HP that gives them a free pass in this affair - it doesn't add up (pardon the pun).
Perhaps you should ask yourself why was a software company selling hardware? Was it to inflate the top-line?
Then to address why didn't the auditors get sued. Perhaps it was because the CEO failed to read KPMG's report. Perhaps it was because if he had read the report, he would have read that "the analysis stated that Autonomy didn’t furnish half of the information KPMG sought, including details on Autonomy’s revenue recognition, expenses and management forecasts." (WSJ 25/9/15)
Perhaps it was because they knew the CFO had misgivings about the deal but allowed herself to be railroaded by the board (which included Meg and Ray Lane). Part of the job of a CFO is to not allow yourself to be railroaded by other board members.
Perhaps it was because they had some other stuff on HP. I can't imagine what. Actually I can, but ....
In "the business" where Autonomy sold their products, the information retrieval sector, they were recognised as curates egg, good in parts, that is where the data was already structured, such as personnel records, etc. Where implementation work was required Autonomy billed significant consultancy fees, in addition to the leasing/per seat fee. Under UK accounting conventions, note, not rules, the consultancy fees, not yet collected, could be put on the books.
The cockup by UK auditors was not requiring sight of contracts for sales. If they had they would have seen the contracts were surrounded by ifs and buts.
"I note with interest that your entire discourse is about tangibles. Just to help your short attention span, Autonomy was a software company which makes valuation by default a bit more tricky, which ought to have ensured the auditors paid attention to any artificially inflated values."
Psst. I think you'll find the answer in your snarky response .... do you like dressing up?
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