back to article Judge puts the $5bn question to HPE: Who else apart from Lynch and Hussain were in on this alleged fraud?

If Autonomy's accounts were fraudulent, an awful lot of people must have been part of the scam, its former CFO Sushovan Hussain's barrister told the High Court in London yesterday. I just got here – what's it all about? In 2011, HP bought Autonomy – a maker of software to keep track of unstructured data, founded by Mike Lynch …

  1. Notas Badoff

    Tipple of the hat to you

    It is said that variations on the Drunkards Walk are efficient when foraging for food. Perhaps not so much when foraging for acquisitions?

  2. a_yank_lurker Silver badge

    Smelling a Rat

    His Honor smells a rat, a very good point is in a company the size of Autonomy more than 2 people would be involved. Even those others involved were only carrying out orders they would know the details. And more than likely many would actually be involved in a fraud. Too many people would be handling the data for someone not to notice.

    1. Doctor Syntax Silver badge

      Re: Smelling a Rat

      "His Honor smells a rat"

      Without a jury a judge can debate with whoever is currently presenting their case. Don't be surprised if he does the same with the defence.

    2. Aristotles slow and dimwitted horse Silver badge

      Re: Smelling a Rat

      I guess so, and I hope so... but if I remember correctly it was 2 people and a truck load of hush money that effectively sank Enron in the end.

  3. asdf Silver badge

    wow

    HPE is about to get a whole lot of dirty laundry aired. They aren't getting that 5 billion. If they were smart they would settle because if the purpose of this was to absolve themselves of blame its about to blow up in their face big time. I imagine share holder lawyers are the ones buying the popcorn now.

    1. Boris the Cockroach Silver badge

      Re: wow

      I imagine many many lawyers are popping open the drinks and celebrating the huge amount of work coming their way....

    2. Nick Kew Silver badge

      Re: wow

      HPE is about to get a whole lot of dirty laundry aired.

      It's not quite that simple. That was then, this is now. In the meantime, HPE was sold on to Micro Focus, whose management had no part in the Autonomy acquisition.

      Whatever dirty laundry is aired, its connection to present-day entities may be less than clear.

      1. Doctor Syntax Silver badge

        Re: wow

        "HPE was sold on to Micro Focus, whose management had no part in the Autonomy acquisition."

        I think that was only the S/W business. Micro Focus seem to be having their own troubles in integrating it.

        1. Anonymous Coward
          Anonymous Coward

          Re: wow

          Close. It was mainly the old, very old and decrepit EDS business that Micro Focus bought. I mean, they really bought it.

      2. Anonymous Coward
        Anonymous Coward

        Re: connection to present-day entities

        "Whatever dirty laundry is aired, its connection to present-day entities may be less than clear."

        Entities (organisations) don't commit fraud. The people running them may commit fraud.

    3. David 164 Bronze badge

      Re: wow

      I doubt lynch would settle.

      1. asdf Silver badge

        Re: wow

        True would take money to buy his silence more than likely. HPE should never have went down this path this far in the first place.

  4. 2+2=5 Silver badge
    Facepalm

    Presumably...

    Presumably, when HP/HPE acquired Autonomy, they also acquired all the company records, including documents and emails?

    So you'd think that answering the judge's question about who else was involved would be a slam dunk, as all the evidence would be there?

    However it seems to be quite a difficult question to answer.

    If only HPE's lawyers had access to some sort of enterprise software that specialises in the analysis of large volumes of unstructured data such as emails and documents then their task would be much easier.

    1. asdf Silver badge

      Re: Presumably...

      An IT nerd burn lol +1.

    2. Gordon 10 Silver badge
      Thumb Up

      Re: Presumably...

      Indeed. Its almost as if they needed a Digital Safe for their emails and such-like

    3. Anonymous Coward
      Anonymous Coward

      Re: Presumably...

      "Presumably, when HP/HPE acquired Autonomy, they also acquired all the company records, including documents and emails?"

      HP went one better - they appear to have acquired a fraudster who turned snitch and has dumped his former bosses in it while walking away untouched.

      If the company records show that everyone was in on it, then HP may have a chance. If it was all "verbal", I wonder if HP's inside informant will have to appear. That would be interesting.

      I was expecting this to be a slow burner - there's been more fun and games in the first week than in almost the entire history of IT court cases. Please don't stop giving :)

  5. mazzy2u2

    Eh?

    I am assuming that HP did some due diligence, check the books etc.? If it looked shifty, then HP should have walked away, but they didnt. Now HP overpaid, then wrote it off and then blames everyone else except themselves for this titanic cockup. A 79% premium over Autonomy's closing share price, wow. There was some financial reporting issues in 2009, which would have made any sensible person go "hmm, lets take a closer look at this" or walk away, but no and plowed on regardless. The SFO looked into any impropriety from the sale and said that theres little or no chance of prosecution and thats been closed. So HP has done this entirely by itself. The writedown of Autonomy apparently only covers $200m, not the full $8.8b, so that should be looked into. I hope that shareholders go to town on HP.

    1. RegGuy1

      Re: Eh?

      So what happens if HP loses? Do the accused get to sue them back?

      1. BebopWeBop Silver badge

        Re: Eh?

        Lynch is in the process of doing just that.

      2. David 164 Bronze badge

        Re: Eh?

        Already happening. More complicated is if he wins in the UK what is the chance of him being extradited to the US?

  6. Phil Endecott Silver badge

    I don’t think this has. been mentioned in Reg coverage:

    There was a story in today’s grauniad claiming that HP’s “due diligence” consisted of four conference calls totalling 6 hours, and that’s it.

    1. Anonymous Coward
      Anonymous Coward

      A reference for others: https://www.theguardian.com/business/2019/mar/28/hewlett-packard-six-hours-of-due-diligence-on-autonomy-court-told

      "HP carried out only a brief period of due diligence to use the Autonomy purchase as a “counterpoint to various bits of bad news that HP was expected to publish” on the same day the deal was announced"

      "The defence’s submission said: “While KPMG had been contracted to provide a number of services in relation to the due diligence, HP’s tight timetable meant that by this point they had not carried out all of the tasks which they had been engaged to carry out. HP nevertheless decided to go ahead.”"

      That would explain why KPMG hasn't been targetted by HP.

  7. Anonymous Coward
    Anonymous Coward

    Hew-Pac obviously got the wrong judge - someone competent.

  8. The Nazz Silver badge

    What a ridiculous procedure and process.

    Why on earth should this take a year to sort out?**

    The single issue is, did Autonomy make fraudulent accounting entries in their published accounts.

    All the Judge needs to ask is "which are the fraudulent accounting transactions, carried out by whom, under the direct instruction/authority of whom." (tbf he'd probably use much better grammar than i.)

    Which is something that could easily, and really ought to be determined outside the courtroom, by a technical department, probably forensic accountants or independent auditors, appointed by the Court. Use the Court hearing to go through the final report on this.

    IIRC didn't the SFO pretty much do that and conclude that there was no cause to even consider a prosecution? Or similar.

    ** a cynic would suggest that with X barristers and Y solicitors on each side, paid on a time basis, it'll stay as it is, thank you very much m'lord.

    Edit : What the new Court system IT really needs first up is a fact checker.

    1. Korev Silver badge

      Re: What a ridiculous procedure and process.

      There has been talk for years of removing the jury from complex fraud trials because most of the arcane accounting concepts are beyond most people. Also, having people taken away from their jobs for six months isn’t really good.

  9. Nick Kew Silver badge

    Foresight vs Hindsight

    With hindsight, we can of course laugh at HP's idiocy.

    But Reg commentards do better than that. We were laughing at this deal before it even happened. And of course many times since.

  10. Jack of Shadows Silver badge
    Mushroom

    As soon as HP abandoned the supposed synergies, that torched a lot more than $5bn in value right there. Just sayin'.

  11. Anonymous Coward
    Anonymous Coward

    Cathie Lesjack

    Is Cathie being called as a witness for the defense? As CFO of HP she might have had an opinion about the purchase. Oh, she did. So why isn't she being called.

  12. Anonymous Coward
    Anonymous Coward

    Ray?

    Oh where for art thou, Ray? Is this .... etc.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2019