back to article Autonomy pulled wool over Brit finance panel's eyes, US court told

Software outfit Autonomy lied to a British financial regulatory panel, an American court has been told by the panel's former chairman. The one-time head of the Financial Reporting Review Panel (FRRP), David Lindsell, told the US District Court of Northern California, sitting in San Francisco, that Autonomy had misled the panel …

  1. asdf Silver badge
    FAIL

    The HP way.

    1. Delusional

      Nope. Nothing to do with HP other than that they allowed themselves to be suckered into it. Facts are Facts

      1. Gordon 10 Silver badge
        FAIL

        Except when they are fake news. Or distorted, or partial, or taken out of context etc etc etc.

        1. Delusional

          But then they wound't be facts would they? See, at the end of the day either someone broke the law or they didn't...

  2. Gordon 10 Silver badge

    This makes no sense (context is everything)

    They dismissed the complaint out of concern that the complainant was unreliable. This has no bearing on what revenues Autonomy were reporting at the time and therefore logic would suggest unless there was an Enron style accounting failure the decision would have been the same.

    Reading between the lines I wonder if the Head was asked a theoretical question based on later circumstances. ie if they had been asked to investigate when the Vatican deal was reported as a failure in the news and the complainant was reliable would they have dug further?

    It also begs the question as to whether he is an expert witness for the persecution and therefore "motivated" to paint things in a bad light. One wonders on what terms he is enjoying a stay in the delightful US of A.

    1. Delusional

      Re: This makes no sense (context is everything)

      This points to only one thing... someone has been super manipulative. Whether an expert witness for the persecution is "motivated" to paint things in a bad light has nothing to do with THE FACTS!

  3. Peter Prof Fox

    And the auditors were...

    presumably one of the big names being blind as usual.

  4. Anonymous Coward
    Anonymous Coward

    This is one of the things that helped kill the Palm phones after HP bought the company. HP didn't have the money or the attention to properly support the Palm phones.

    1. Delusional

      What's "one of the things"? Breaking the law?

    2. sanmigueelbeer Silver badge

      HP didn't have the money or the attention to properly support the Palm phones.

      Look at HP's M&A "s-tragedy". HP only want the brand and the customer list portfolio. After this list is secured HP will then proceed to "gut" the company inside out until there is nothing left.

      When they finished gutting Palm only then did they realize that all the key/core developers have been forcefully shown the door (and the last politely turned off the light).

      So here was HP, holding a bucket without the bottom and the barn is well ablaze.

      Autonomy was sold to Hewlett Packard for $11bn in August 2011, with HP (as was, now known as HP Enterprise) writing down Autonomy's book value by a record-breaking $8bn months later in November that year.

      So whoever did an audit of Autonomy (before the acquisition) must be that bad or Autonomy had one creative bookkeeper. Writedown of $8bn. Wow.

      1. Charlie Boy

        As an accountant by training, I still can't believe that HP did such bad due diligence checks that they could not find the booking of future income in Autonomys's accounts. It's basic audit checking, and it's very difficult to hide.

        Also the FRRP guy would be hostile to Autonomy as they've just made him look stupid/incompetent in not investigating the whistleblower's allegations more thoroughly. He should expect have expected Autonomy to have painted the whistleblower in a bad light, whether it was true or not it shouldn't have affected his investigation.

      2. Anonymous Coward
        Anonymous Coward

        "Autonomy was sold to Hewlett Packard for $11bn in August 2011, with HP (as was, now known as HP Enterprise) writing down Autonomy's book value by a record-breaking $8bn months later in November that year.

        So whoever did an audit of Autonomy (before the acquisition) must be that bad or Autonomy had one creative bookkeeper. Writedown of $8bn. Wow."

        I believe the issue is why did HP think it had to pay so much for Autonomy? I thought there were rumours of Autonomy being purchased in 2009/2010 for around US$3bn and the last reported audited accounts were in 2009 (likely due to looking to sell the business). The share price before HP's offer was around the US$5-6bn mark.

        An auditor doing a one off audit for a takeover will only find anything dodgy IF they are shown evidence of dodgy practices. In all likelihood those would be hidden from the auditor or provided in such a way as to appear "routine" (i.e. sales presented by region when you were only misrepresenting sales in 20% or so of the region so it is hard to assess from a small sample).

        What did HP know that the share market didn't? Or was it just HP chose to believe a fairy story?

      3. David Beck

        KPMG did the due diligence

        And even if the Autonomy accounts had been perfect there was no way they were worth $11bn. This was all vanity using the shareholders money.

  5. FozzyBear Silver badge

    This highlights how poorly the independent auditors did their job. Shortfalls in reported revenue in the millions should have leapt off the page.

  6. John Smith 19 Gold badge
    Unhappy

    So roughly

    FFRP "We've had a report about your accounting practices"

    Autonomy CFO "We know this person. He is a bounder of ill repute. You may have my word on it as a gentlemen of the Accountancy Profession."

    FFRP "Unnecessary as you have a Duty to report honestly. And try to hire more honest staff in future"

    Autonomy CFO "We will, but it's hard to keep the riff raff out"

    IOW Job f**king done.

    I think it's good to know the FFRP take such complaints seriously and investigate thoroughly.

  7. amanfromMars 1 Silver badge

    Hypocrites r Us Leading Collapsing Things and Doing IT their Way?

    Autonomy, it reported from the trial, was said to be in the habit of accounting for projected revenues from its resellers even when those resellers had not yet landed deals with end-users.

    A little something major dodgy that the Chancellor and Under-Treasurer of Her Majesty's Exchequer, an appointment currently occupied by Philip Hammond, does regularly?

    Is it criminal?

    1. amanfromMars 1 Silver badge

      Re: Hypocrites r Us Leading Collapsing Things and Doing IT their Way?

      Furthermore ...

      And, when done in open consort and the full knowledge of others is it a conspiratorial cartel proactively engaged in a mega joint enterprise, with, in the particular and peculiar case being sighted here, the Conservative Party being liable and accountable for all damages and losses/expenses and rebuilding costs for ventures floated and failing to match mass expectations and electoral promises?

      Methinks it is impossible to deny that painted picture being honestly true if one wants to retain any measure of credibility.

      So, what you gonna do about it, apart from ignoring and condoning it? Anything exciting and noble and formerly worth a Nobel?

  8. M7S
    Coat

    If they go after anyone else in Autonomy's former management, would anyone be....

    ...Lynched?

    1. Delusional

      Re: If they go after anyone else in Autonomy's former management, would anyone be....

      The interesting point the lawyers have highlighted is that for international cases, there is no time limitation on prosecuting Lynch. Allegedly the SFO have already been reaching out to several of the Autonomy witnesses preparing to re-open their case once the DOJ conclude their case in CA which they are preparing to do this week apparently. And then theres the civil case... and then theres Deloitte... and then theres Darktrace where several employees are leaking information. Its gonna be a movie for sure!

  9. Aristotles slow and dimwitted horse Silver badge

    It's all very odd...

    This seems to be going two ways now... yes I'm sure that accounting irregularities could be found in any large / enterprise level business, which is the tack the prosecution is seemingly now taking. But surely for a deal of this magnitude, the responsibility still stops with the purchaser and the auditors to uncover all of this stuff prior to point of sale?

    Anyone know whom the auditors were? I have my suspicions.

    1. Delusional

      Re: It's all very odd...

      <<But surely for a deal of this magnitude, the responsibility still stops with the purchaser and the auditors>> The responsibility for breaking the law lies with the person(s) who broke the law... auditors only sign-off what the management tells them and this case has shown that Deloitte may be fools, but they signed off what they were told.

      1. Anonymous Coward
        Anonymous Coward

        Re: It's all very odd...

        The whole point of auditing is to challenge what 'management' are telling you is the truth. Complete failure of auditing here.

    2. JimC Silver badge

      Re: It's all very odd...

      I suppose if due diligence auditing had to be of sufficient depth to uncover a determined fraud that was good enough to be hidden from the company's own auditors, then the due diligence auditing would be so expensive as to render most deals and takeovers impractical, and in that case executives would have to revert to making a reasonable income running their companies better instead of making megabucks from the deals. And that would *never* do...

  10. Jpembridge

    Two/three wrongs don't make a right

    For sure the auditors did not do a good job - for sure HP over paid and probably should never have bought Autonomy at any price.

    But if, as the court proceedings allege Autonomy were involved in serious fraud. Then fraud is fraud and justice should take its course.

    Surely the best we can hope for is for better due diligence in the future, and if found guilty, more caution from those considering a fraudulent path in the future?

  11. amanfromMars 1 Silver badge

    For Falling Saints turned Perfectly Attractive Sinners

    One of the resellers whose projected revenues found its way onto Autonomy's books, the court heard and as El Reg reported, was a firm called Microtechnologies LLC. They were said to be negotiating a deal with the Vatican to digitise the home of Catholicism's archives. The deal fell through.

    The jealously and zealously guarded secrets transferred to virtual files then would methinks be worth in the terms of trillions of luscious lucre.

    Aint that right, Holy Papal See?

  12. Alan Johnson

    What happened to due dilligence?

    I can't see how understanding the accounting practicies and paticularily revenue and costs/expenditure were not part of due dilligence. This case has home court advantage but still seems massive incompetence on HPs part.

  13. Anonymous Coward
    Anonymous Coward

    Only a few remain

    There only a few original Autonomy employees left behind at the office, each of them would have some interesting stories to tell/leak

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