back to article Judge slaps down Meg Whitman for accusing Autonomy boss of being a 'fraudster who committed fraud'

A High Court judge rebuked Meg Whitman today for stating as a fact that former Autonomy chief exec Mike Lynch committed fraud. During a tense series of exchanges this afternoon between Whitman and Lynch’s barrister Robert Miles QC, the one-time HP CEO was repeatedly asked why her company didn’t speak to Lynch himself before …

  1. ivan5

    How to open your mouth and step in with both feet. My way or the highway and don't try to confuse me with facts my mind is made up said Meg - what a way to run a business.

    1. Pascal Monett Silver badge
      Coat

      Well yeah, but you have to admit that, if you can't make up your mind, you can hardly run a business.

      1. bazza Silver badge

        Well, you can take a risk, but then you have to be prepared to face that risk.

        So far as I can see the trial is going pretty badly for HP. There's been a string of rubbish testimony from various HP bods that's drawn sharp comments from the judge. Belittling the role of the judge isn't exactly going to win him over...

        I don't think the judge is going to take very long in his deliberations on this one. On the face of it, it's not going HP's way. The only way they're going to win, I suspect, is if some incontrovertible evidence of fraud is presented. Given that they're subjecting the judge to some pretty ropey witness "opinions" I suspect that there is no such evidence to present. So if it is coming down to person's words vs another's, they're not making a good impression. I wonder if there's been a ton of lawer coaching done in the USA that's exposing itself rather poorly in the harsh light of a different judicial system.

        1. Anonymous Coward
          Anonymous Coward

          ...better judicial system. Just saying.

          1. David 18

            "...better judicial system. Just saying."

            ...Real judicial system... even

        2. Mark 85 Silver badge

          I wonder if there's been a ton of lawer coaching done in the USA that's exposing itself rather poorly in the harsh light of a different judicial system.

          It's tough to coach and have the person being coached follow the coaching if their ego is beyond large. I'm thinking it's more of a "I know better than you lawyers." kind of thing.

        3. Doctor Syntax Silver badge

          "I don't think the judge is going to take very long in his deliberations on this one."

          He will. A judgement has to be careful and detailed and with a lengthy trial like this that's going to take a long time. However Meg might not have taken such pains with hers.

          1. Anonymous Coward
            Anonymous Coward

            Judges also spend a lot of time in judgments* assessing the credibility of witnesses. This case is a big one and I expect the judge will be diplomatic, but in lesser cases they can be extremely scathing.

            *British legal spelling.

            1. Anonymous Coward
              Anonymous Coward

              "I expect the judge will be diplomatic, but in lesser cases they can be extremely scathing."

              Judges can be both diplomatic and scathing... The choice of words will be interesting.

              1. pavel.petrman Bronze badge

                Re Choice of words

                That is the one thing I do hope for in this trial - some very fine English to please us bystanders.

                1. CrazyOldCatMan Silver badge

                  Re: Re Choice of words

                  some very fine English to please us bystanders

                  ..and confuse the Yanks. Here's to Queens[1] English!

                  [1] No - not the Borough of Nu Yawk..

            2. defiler Silver badge

              I have been nosy and looked through the court records of a case involving somebody I worked with previously. The judge's comments regarding him as a witness were very cutting. His assessment surprised me not one bit.

      2. big_D Silver badge

        Making up your mind in the face of facts, or without the relevant facts, is a sure way to run your company against the wall.

        1. Anonymous Coward
          Anonymous Coward

          "Making up your mind in the face of facts, or without the relevant facts, is a sure way to run your company against the wall."

          But there are contradictory facts.

          Meg and HP could never do anything wrong and yet Autonomy doesn't appear to have been a great purchase (based on the price alone) and the synergies never materialized when HP significantly damaged the company (~150 employees out of ~1800 leaving in a quarter seems a little on the high side if you are aiming for status quo).

          How can we make this Leo and Autonomy's fault?

          1. Michael Wojcik Silver badge

            But there are contradictory facts.

            Are there? Or are there simply diverse contributing factors?

            Lesjak and others said from the start that Autonomy was overvalued by HP. Apotheker admitted he didn't perform due diligence - he didn't read the auditors' preliminary report, ignored those who did, and completed the purchase and fired the auditors before the final report was ready. That suggests a significant portion of the blame goes to Apotheker and his supporters.

            Hussein was convicted. He may have been wrongfully convicted, but the conviction (on all 14 counts) is at least an argument for improper accounting and misrepresentation by Autonomy. That puts some blame on Autonomy.

            Whitman's and Lynch's testimony and related evidence strongly suggests HP's internal culture was badly broken in ways that impeded sales of Autonomy products after the acquisition. That puts more blame on Apotheker and some on Whitman, and on their management teams.

            None of these are contradictory. All of those parties1 could have contributed to the gross overpayment for Autonomy and the subsequent failure of the Autonomy product portfolio within HP. There needn't be a single villain in this story.

            HP(E)'s attempt to salvage the reputation of its board and CEOs in this debacle by crying foul does seem to be floundering in this trial, as no one is coming off very well. But I expect that means the case ultimately won't be strong enough to find for the plaintiff (HPE), which depending on your interpretation would either vindicate Lynch and Autonomy or acknowledge mutual bad behavior.

            1Except perhaps Lesjak, who seems to have been the Cassandra of the original deal. Whitman appears to be trying to lay the primary responsibility for HP's accusation of fraud by Autonomy at her feet; whether that's valid, and if so whether that accusation was made in good faith, are still open questions.

            1. Paul D Smyth

              1 Whitman appears to be throwing Lesjak under the bus, just as she threw Autonomy under the bus. There's a pattern of behaviour here that would make the Politburo proud

              1. CrazyOldCatMan Silver badge

                pattern of behaviour here that would make the Politburo proud

                Oh come on - she hasn't had them taken under 'protective custody' to Siberia yet - a custody that always seems to result in an unfortunate accident with a gun..

                (But that's only because HP doesn't have access to Siberia)

      3. CrazyOldCatMan Silver badge

        if you can't make up your mind, you can hardly run a business

        One hopes that the process of "making up your mind" takes reality into account rather than what one hopes or imagines reality is..

        But then, given what has happened at HP (and IBM), clearly my hopes are somewhat dashed.

    2. Commswonk Silver badge

      Etiquette when in Court

      How to open your mouth and step in with both feet.

      Rule 1: when in Court do not annoy the judge. However big a fish you are in your own pond, right now you are in a lawyers' pond and the judge is bigger. Much bigger.

      1. Anonymous Coward
        Anonymous Coward

        Re: Etiquette when in Court

        Especially in this case as (I think) it'll be the judge deciding, there's no jury. Whoops!

        If you really annoy a judge, they can simply sling you in the clink for contempt of court. I've no first hand experience of this, so I may be wrong...

        What I think is happening is that some big chunks of HP's historic and present mangement are doing a good job of illustrating just how bad they've been at running the company. They losing this case. Buying out Lynch's company at too high a price is one thing. Alledging fraud, bringing an expensive fraud case and losing it is only going to compound that mistake. Question is, will they face lawsuits in the US from HP shareholders if they lose this case?

        I do wonder if this is all to do with the burning need for management to "make their mark", or "do the big deal", etc. Was making a big deal more important personally to HP's head honchos than making a wise acquisition? I've seen hints of this in other US companies - buying stuff makes you look good, actually properly integrating it into your existing business to make a slicker more capable company seems to come second (if anywhere).

        1. Ashentaine

          Re: Etiquette when in Court

          > you really annoy a judge, they can simply sling you in the clink for contempt of court. I've no first hand experience of this, so I may be wrong...

          At the very least they can have you removed from the courtroom if you're considered as disruptive, which is a pretty damning thing in and of itself. And I'm sure judges have a fair amount of latitude regarding what they consider disruptive to court proceedings.

          1. pavel.petrman Bronze badge
            Coat

            Re: judges have a fair amount of latitude

            I do believe this judge would much rather have a decent amount of latitude than any amount of probook. (see icon)

        2. EveryTime

          Re: Etiquette when in Court

          Well, we've already established that top management was bad at running HP, and had no excuse for grossly over-valuing a company in a high-profile, high-value acquisition.

          And we've established that Autonomy cooked the books. Autonomy's response seems to be "it was so blatant that their due diligence should have caught it".

          The question before the court seems to be if obvious, gross fraud is actually fraud, and how much was due to HP's upper management incompetence at understanding the true value of the merger and how much was due to HP's mismanagement.

          The popcorn is tasty, but I'm not sure I can pick a side to cheer for.

        3. Anonymous Coward
          Anonymous Coward

          Re: Etiquette when in Court

          I work for a ambulance chasing Legal insurance company on one fun day in court, it was that judges last day before his retirement, he literally waked into the court started the session pulled a coin out of his pocket flipped it and then pointed at the opposition a states "I find for you" effectively closing the case in their favour.

          It turns out that while this is extremely bad practice its not actually illegal! thankfully we and the opposition were able to request a retrial and sort things out.

          1. Anonymous Coward
            Anonymous Coward

            Re: Etiquette when in Court

            Cool story bro! That happened to me too only he brought in a roulette wheel to make his judgement.

            Turns out while it's not illegal it is ficticous!

        4. Trollslayer Silver badge
          Flame

          Re: Etiquette when in Court

          Broadcom made that mistake buying a business unit from another company that lied about their sales and potential orders.

          No boots on the ground to see what really happened.

        5. Commswonk Silver badge

          Re: Etiquette when in Court

          Sorry for the long quote... I do wonder if this is all to do with the burning need for management to "make their mark", or "do the big deal", etc. Was making a big deal more important personally to HP's head honchos than making a wise acquisition? I've seen hints of this in other US companies - buying stuff makes you look good, actually properly integrating it into your existing business to make a slicker more capable company seems to come second (if anywhere).

          Obviously learned nothing from the Royal Bank of Scotland buying ABN AMRO.

          Perhaps the word hubris doesn't feature in Webster's Dictionary.

          1. Anonymous Coward
            Anonymous Coward

            Re: Etiquette when in Court

            Well, it's Greek to me.

      2. FozzyBear Silver badge

        Re: Etiquette when in Court

        Slit someones throat and you get X years in gaol. Steal a car or damage someones property you get anything from a slap on the wrist to X months in gaol.

        Piss Off the beak and, depending on the circumstances,prison guards will need pack mules to ship sunlight to the legal hole you have dug for yourself.

      3. macjules Silver badge

        Re: Etiquette when in Court

        That has been superceded by Rule #2, namely,

        When you are so far up Schitt Creek that even the minnows are gasping, it might be a good idea to stop paddling. Or in other words stop blaming world + dog for your incompetence.

        1. Commswonk Silver badge

          Re: Etiquette when in Court

          @macjules: That has been superceded by Rule #2, namely,

          In the event of Rule 2 not being applicable, then Rule 3 shall apply:

          When you find yourself in a hole, stop digging.

      4. don't you hate it when you lose your account Bronze badge

        Re: Etiquette when in Court

        The problem here is that she thinks she's in an American court room. Poor soul, must be a shock having to present actual facts.

        1. BebopWeBop Silver badge

          Re: Etiquette when in Court

          Yes, the only person coming out (at the moment) well from this is the judge, not the defendants, plaintiffs or their legal teams.

          1. Anonymous Coward
            Anonymous Coward

            Re: Etiquette when in Court

            This is why the legal system makes it possible for both sides to lose (i.e. a very small award and both sides to abide their costs.) But the lawyers win.

            Don't want to give money to lawyers? Rein in the enormous ego, do the job you're paid to do properly, keep records of decisions and don't let personal spite influence you. And don't chase unicorns.

            1. Aladdin Sane Silver badge

              Re: Etiquette when in Court

              don't let personal spite influence you

              But what if spite is the only thing that keeps me going?

              1. Anonymous Coward
                Anonymous Coward

                Re: Etiquette when in Court

                I know someone like that. He kept running up bills with different solicitors only to have barristers tell him "that won't fly in court" because you don't want to get a reputation for representing idiot litigants.

                1. Doctor Syntax Silver badge

                  Re: Etiquette when in Court

                  One of the regular defence barristers would, reputedly, tell his clients to plead guilty if they were well caught but if they didn't he'd still take them on. That might or might not have been the case but I've certainly seen him simply sit there, raise an occasional objection if something was out of line but not much else.

            2. CrazyOldCatMan Silver badge

              Re: Etiquette when in Court

              And don't chase unicorns

              Because they are scary, scary beasts that would as soon eat you as look at you. That virgins thing? Turns out their flesh is much sweeter, spiced with the destruction of all that innocence..

          2. Doctor Syntax Silver badge

            Re: Etiquette when in Court

            "not the defendants, plaintiffs or their legal teams"

            The defendants' legal teams seem to be doing OK.

        2. CrazyOldCatMan Silver badge

          Re: Etiquette when in Court

          must be a shock having to present actual facts

          .. and not to have the judge defer to her because she's a CEO and has lots and lots of money..

      5. Anonymous Coward
        Anonymous Coward

        Re: Etiquette when in Court

        Do not taunt happy fun ball m'Lud.

    3. TheVogon Silver badge

      Of course not performing proper due diligence before a multi billion pound purchase is just negligence rather than fraud....

  2. FozzyBear Silver badge

    Seems there is enough blame to go around for everyone involved.

    1. bazza Silver badge

      Not sure what you mean, but if HP lose then I presume that means HP really did overpay, and it'd be their own fault for having done so.

      AFAIK if someone who should know better offers you well over the odds for something you're selling, you're not obliged to tell them they're making a mistake. That's their business. This, fundamentally, is the goal of all businesses, selling something for as much as possible, not for cost value.

      A car dealer who sells a rubbish car to a grandmother for well over the odds is a nasty fraudster. Same seller, same car, sold to another car dealer for the same inflated price, that's clever business (or maybe a tax fiddle). To extend the analogy to this case, AFAIK HP's complaint is that the car was not as described, but can't actually say where the desription is inaccurate.

      1. oiseau Silver badge
        Facepalm

        ... if someone who should know better offers you well over the odds for something you're selling, you're not obliged to tell them they're making a mistake.

        Indeed ...

        It's really so obvious.

        HP top brass screwed up (jumped in without looking first, trying to trump Oracle) and now they're needing someone to blame for the pool not having quite enough water, lest the inevitable shareholder class action that's coming their way suit leave them penniless.

        This would not have happened in Bill Hewlett's and David Packard's time.

        Must be turning in their graves ...

        1. Anonymous Coward
          Anonymous Coward

          Spinning in their graves

          Why? Hewlett Packard the company was spun off years ago as Agilent.

          1. Trollslayer Silver badge

            Re: Spinning in their graves

            Then re branded as Keysight when they cut costs and staff yet again.

            1. Anonymous Coward
              Anonymous Coward

              Re: Spinning in their graves

              No, Agilent Technologies is still going. (I found one of their buildings unexpectedly in Shropshire only last week.)

              Keysight actually does R&D in the UK and is obviously a technology-heavy, if small, company.

          2. not.known@this.address Bronze badge

            Re: Spinning in their graves

            "Why? Hewlett Packard the company was spun off years ago as Agilent."

            The way many modern businesses behave always make me think of the disclaimer in film and TV programmes about how the characters are fiction and not meant to represent a real person, alive or dead - except in these case it's more like "this bunch of money-grubbing shysters are a law unto themselves and bear no relation to any previous company of the same name".

      2. Anonymous Coward
        Anonymous Coward

        Why isn't Ballmer in court over Nokia then?

        1. Anonymous Coward
          Anonymous Coward

          Ballmer simply made a bad decision. That's not fraud.

  3. Anonymous Coward
    Anonymous Coward

    I am the great and powerful Meg

    Sounds like testimony from Divorce court.

    "This was not the company I married. The cheater cheated and we know he's guilty cuz it's just so obvious."

    I am dumbfounded how those "synergies" didn't work.

  4. Anonymous Coward
    Anonymous Coward

    Easy Straight Forward Case so Far

    I put myself in the position of the judge and keep trying to find evidence of widespread fraud and fraud of a magnitude that allowed for the 4-5$bn in excess valuation. So far HP pointed to at most tens of millions dollars in fraudulent transactions nothing big enough to satisfy their case. I say tens of millions to be generous because I have been following and cant find a specific amount.

    The reality is that Autonomy was "shopped" to Oracle for 4$bn and Oracle thought it was over valued. Everyone outside of HP thought their take over price was outrageously overvalued. Meg was a part of HP Board then. She was part of the decision. Now she is saying they were mislead by Leo and that Lynch was a fraudster.

    There may well have been some fraud, but was it of a magnitude to justify the valuation. Everything tells me it was not.

    1. tfewster Silver badge
      Facepalm

      Re: Easy Straight Forward Case so Far

      I look forward to hearing ex-CFO Cathie Lesjak's testimony. Not just how much the alleged fraud cost HP, but also how her recommendations against the purchase were ignored.

      I presume that as an ex-employee, she'll be fairly independent.

      1. Anonymous Coward
        Anonymous Coward

        Re: Easy Straight Forward Case so Far

        The attitude of coal face in my small part of the HP empire was that of all members of the HP clown club senior management, Cathy was well regarded. Her emails after Hurd was removed were at least plausible. A most refreshing change.

      2. Doctor Syntax Silver badge

        Re: Easy Straight Forward Case so Far

        "I presume that as an ex-employee, she'll be fairly independent."

        And knows where the bodies were buried.

    2. Anonymous Coward
      Anonymous Coward

      Re: Easy Straight Forward Case so Far

      I'm fully in agreement with you, but it's even nastier than that. HP are being asked to specifically prove that Lynch himself committed fraud. So far the only solid evidence I've seen of any padding of Autonomy revenues (by including the price of associated hardware rather than just their own software) was carried out by their US head of sales (Christopher Egan). The practice was against Autonomy's published policies, but his justification seems to have been that no-one actually stopped him. There seems to be some evidence that Sushovan Hussein knew about this padding and didn't act, but HP so far has done nothing to prove that Lynch had any knowledge of what was done in these deals. Mystic Meg turning up in her power suit and pearls and declaring that he was a "Fraudster who committed Fraud" might be the sort of thing that sways the court in a TV drama, but in this case it just seems to have pissed the Judge off that they still haven't brought him anything factual to go on.

      The American courts have allowed Egan to take a plea deal giving him immunity from criminal prosecution for testifying against his superiors at Autonomy, and have already locked Hussein up as a result. This could be seen as the American criminal courts allowing one of their own to go free for their own wrongdoing in exchange for helping them prosecute a couple of less guilty* foreigners instead. Based on what we've seen so far from this civil trial I don't blame Lynch for fighting the extradition requests for him to face US "Justice".

      * These are former top executives in the technology sector. I refuse to use the word "innocent".

    3. Paul D Smyth

      Re: Easy Straight Forward Case so Far

      All along I've been suspicious of this case. Is it fraud because it was found to be fraud or because HP convinced a US court that it was. It sound to me that HP is coming under far more scrutiny in the High Court than in the US. Just smells of HP overpaid through their own incompetence then their unwieldy corporate structure wrecked the culture of the company causing key employees to leave. Rather than admit their own failings they threw Lynch & co under the bus. I've seen the same happen when an entire team from a small company IBM goggled up resigned en masse. It could be that Autonomy were fraudulent, it could be that they were naive and negligent but to me this is most about HP stitching someone up to protect themselves from shareholders suing them

  5. John McCallum

    Is there any word on the Left Pondians case against those Autonomy employees.

    1. BebopWeBop Silver badge

      About what? Don’t mean to be obtuse but that could mean anything.

  6. Nosher

    Making it up?

    I thought that Whitman's comment "that is a major role of the CFO and the accounting team, to decide what is the right answer" was a bit odd. Outside the realms of overtly creative accountancy, the rules of finance are fairly deterministic. That ought to mean that given a set of numbers, the answer should always be the same, but instead it comes across as an admission that stuff is being made up somewhere to match a pre-selected version of reality. Surely not?!

    1. Anonymous Coward
      Anonymous Coward

      Re: Making it up?

      The old joke is that the difference between a bookkeeper and an accountant is that when asked "how much profit did we make this year?" the bookkeeper gives a number and the accountant asks how much you would like it to be.

    2. I ain't Spartacus Gold badge

      Re: Making it up?

      I've dealt with some reasonably high level accountants, in my days working for a US multi-national, and been on the edge of decisions about where and how to book revenues and costs. And that wasn't about some complicated tax avoidance scheme, just normal business. Yet there were lots of discussions about decisions that simply weren't clear-cut. Including several arguments with auditors - who were challenging ways we'd done stuff - but would often back down in the face of a decent argument.

      But we were a simple retailer. Software accounting gets even weirder. You've got software costs to split over several years - it might take 5 years to write a piece of software you then sell for 10.

      But sales get even weirder, so you might sell someone software for a million for 5 years, with ongoing annual license fees of say £100k, plus an initial customisation cost of £50k and ongoing training/consultancy of £20k a year. Do you just total that up and split the revenue over 5 years? Or do you recognise the £1.05m in the first year and the rest annually. Or do like some companies were doing before the dot.com bust and recognise all revenue in the first year, and pray sales keep growing before your revenues collapse in following years?

      Hardware sales should barely matter if you're looking at profits - because they're very low margin, so it's just cash in and out. If you're tracking profits - then only the software and consulting/customisation should really be showing up, and then you need to look carefully whether it's all being booked to the current year, so profits are about to take a nosedive. But then HP didn't wait to read the completed audit report... What could possibly go wrong?

    3. Nick Kew

      Re: Making it up?

      Synergies, innit! The whole is greater than the sum of the parts[1]. By how much? - now we're into Dark Arts.

      [1] Or the opposite, if sufficiently mismanaged.

    4. Michael Wojcik Silver badge

      Re: Making it up?

      Outside the realms of overtly creative accountancy, the rules of finance are fairly deterministic

      I'm not an accountant, but I believe this claim is wildly inaccurate.

      First, we're talking here about accounting, not finance. The latter, as a term of art, generally refers specifically to the analysis of assets and liabilities; the former is broader, dealing with various non-financial aspects of economic entities as well.

      Second, which rules? GAAP? IFRS? In this case, I believe (haven't bothered to confirm, but this is usual for US and UK) we have an organization using the former purchasing one that used the latter.

      Third, even the most surface understanding of GAAP or IFRS shows how many more or less subjective decisions are made when accounting for various events under them. Just look at a summary of GAAP or IFRS, such as Wikipedia's; it will be full of loaded phrases such as "as long as it is reasonable to do so", "may be charged", "decided based on", "should be considered", "selection of", "measured in either".

      It's not a matter of throwing a bunch of numbers into a spreadsheet and toting them up at the bottom.

  7. Mike Timbers

    Wow, that certified software has really had to prove itself.

    Good to know that while certification of software for HP's systems requires "a certain due diligence", in reality it's apparently a couple of hours of filling out a questionnaire.

    "Unimpressed, Whitman replied: “With all due respect, this is a tiny issue,” continuing: “When you sell a customer a product, there needs to be a certain certification around that product, a certain due diligence, and this was one of the requirements of a big company. I think this took, maybe, a few hours to fill out this questionnaire. This is a minuscule issue… OK, you get someone to fill out the questionnaire, it takes two hours and you’re good to go.”"

    1. Salim Suleman

      Re: Wow, that certified software has really had to prove itself.

      That isn't due diligence... it's a compliance box ticking exercise, so that when things go tits-up the guys on the receiving end can say "not my fault... I followed the procedure".

      1. Anonymous Coward
        Anonymous Coward

        Re: Wow, that certified software has really had to prove itself.

        And we all know in these kind of compliance processes that :

        a) It takes a damn sight longer that 2 hrs.

        b) That the form is just the start of the process and the real process is highlighting the exceptions and trying to find a way to articulate to the Jobsworth on the other end why question no 247 is spectacularly dumb for this context.

        c) Then dealing with ludicrous escalation process.

        My worst example of this? In a former role I had to hire a Security Architect for 6 months to get an internal application deployed with the sign-off of the CISO Team. The Head CISO (who would have been paid 200k pa minimum) insisted on signing off every exception - include the false positives generated by Fortify.

        I will lay odds that HPE's processes are similar.

      2. Anonymous Coward
        Anonymous Coward

        Re: Wow, that certified software has really had to prove itself.

        "That isn't due diligence... it's a compliance box ticking exercise"

        And if the compliance box ticking exercise leads to all software+hardware sales missing the quarterly sales deadline, then what Meg?

        Or does that set off your super sensitive fraud detector Meg?

        Maybe the problem is becoming more obvious?

        1. The First Dave

          Re: Wow, that certified software has really had to prove itself.

          I must admit, I had to read that bit of evidance several times, to be sure that Meg wasn't talking about the due diligance done on the Autonomy deal...

          1. Doctor Syntax Silver badge

            Re: Wow, that certified software has really had to prove itself.

            Oh, no. That's what applies to the little people. It's even more straightforward for CEOs.

    2. jeffty

      Re: Wow, that certified software has really had to prove itself.

      As an ex-HPE employee, I can assure you that any HP process is more convoluted than a couple of hours filling in a form.

      The operational processes consultants, engineers and technical staff had to follow were an absolute nightmare and definitely obstructed our ability to do our job. They hampered our productivity and cost the business money without adding real value. A lot of these processes were established, then never reviewed or changed, meaning we were commonly following guidance and procedure that was years out of date. Any attempt to question the absurdity of the process was met with hostility from upper levels of management.

      It wouldn't surprise me if the processes on the sales/procurement side of the fence were just as bad if not worse. I'm more inclined to believe Lynch on this than Whitman.

      1. Anonymous Coward
        Anonymous Coward

        Re: Wow, that certified software has really had to prove itself.

        Well, you could always submit an amicus curiae brief to the curt, and screw her for lying.

        1. Michael Wojcik Silver badge

          Re: Wow, that certified software has really had to prove itself.

          Yes, I'm sure the judge would put great weight in an amicus brief submitted by a single ex-employee, concerning a vaguely-described procedure he may not have actually performed. That would be a trenchant thrust indeed!

      2. Anonymous Coward
        Anonymous Coward

        Re: Wow, that certified software has really had to prove itself.

        While I don't have any specific knowledge about HP itself, my experience as an ex-employee of another "name is just letters" American tech corporation is that the only thing you can get done with less than 2 hours of red tape is requisitioning a pencil. Sometimes not even that.

        1. Anonymous Coward
          Anonymous Coward

          Re: Wow, that certified software has really had to prove itself.

          You want ONE pencil?

          Sorry, stationery orders are subject to a $50 minimum order, which will require approvals including the VP of your business unit...

        2. son of sam

          Re: Wow, that certified software has really had to prove itself.

          You had it made, at HPE we had to bring our own pencils.

          1. Anonymous Coward
            Anonymous Coward

            Re: Wow, that certified software has really had to prove itself.

            That's because an aspiring-CFO-to-be, who lost out to Lesjack for the CFO role, sent out a company-wide email asking us to cut back on pencils. That was circa 2004-5.

            1. Anonymous Coward
              Anonymous Coward

              Re: Wow, that certified software has really had to prove itself.

              Flaxman.

  8. Cuddles Silver badge

    Due diligence?

    "Autonomy had been forced to go through an internal HP due diligence process"

    Wait, HP had a due diligence process? Surely if that was the case, they wouldn't be in this mess in the first place?

    1. Salim Suleman

      Re: Due diligence?

      If due diligence is 2 hours of filling a form in... what does that say about the use diligence carried out in the Autonomy acquisition.

    2. Anonymous Coward
      Anonymous Coward

      Re: Due diligence?

      Whitman was talking about due diligence on the Autonomy product as part of the process to permit HP salespeople to sell it. She wasn't talking about due diligence on purchasing Autonomy the company.

      1. Wellyboot Silver badge
        Joke

        Re: Due diligence?

        Did that take 3 hours over a good lunch?

      2. Aladdin Sane Silver badge

        Re: Due diligence?

        Did you hear a whooshing noise?

  9. Anonymous Coward
    Anonymous Coward

    HP massively overpaid for a company where most of the value was in the employees. Then all the decent employees left and the value tanked. And are now clutching at straws claiming they *must* have been deceived, because otherwise how could they have lost money on the deal?

    1. Anonymous Coward
      Anonymous Coward

      The issue is a little more complex

      - HP definitely overpaid. By how much is a little hard to say as a lot of the valuation is based on what Autonomy may have been worth to HP. HP thought US$9bn-US$17bn depending on the fit.

      - The larger market thought Autonomy were worth around ~US$7bn and their were suspicions that Lynch and Hussein may have been putting banana skins in the transmission to keep it running smooth.

      - Senior Autonomy management convinced HP that they were buying a premium product. Based on evidence in this case, I'm not sure HP needed much convincing.

      - HP didn't carry out adequate due diligence. The lack of a signed due diligence report after the purchase suggests that none of HP's partners wanted to accept liability for HP's failings.

      - post-acquisition, HP appear to have made Autonomy's life difficult resulting in lost revenue.

      - post-acquisition, HP was aware significant numbers of Autonomy staff were leaving and it appears to have affected their ability to execute "synergies"

      - post-acquisition, some accounting irregularities relating to the booking of revenue were discovered. While the irregularities definitely occurred based on the evidence presented, whether they amounted to criminal fraud, who exactly was involved (versus the testimony of one of the perpetrators who appears to have got off lightly), and the total value of that fraud and subsequent impact on valuations still needs to be disclosed publicly.

      For example, if the fraud contributed 20% to the overvaluation (US$30m over 10 years with 333% growth giving a nice round US$1bn), poor post-acquisition management lost/delayed a further 20% of the value, 30% was down to failing to execute synergies due to loss of staff and the remaining 30% was down to lack of due diligence, then HP will still be likely to face investor law suits.

      If the 20% of actual fraud is deemed to have been missed in due diligence (or worse, identified post-acquisition by the due diligence team rather than HP...), indicating HP's behavior during the acquisition was a contributing factor to the overvaluation, how will that play out given Megs responses?

      These numbers are guesses - HP may know the real numbers but I'm not sure it would publicly admit to them. YMMV

  10. pig

    "Whitman fell back on saying she trusted her team at HP, particularly including then-CFO Cathie Lesjak"

    Maybe HP should have trusted her before the acquisition, when she was recommending against it?

    For the judge though, surely this just reinforces that HP decided a value for Autonomy without proper care and attention.

    They then decided Lynch and Hussain were fraudulent, again without proper care and attention.

    In both cases they leapt before they had full finished looking.

    I see no one to blame here except for HP.

    1. Anonymous Coward
      Anonymous Coward

      ""Whitman fell back on saying she trusted her team at HP, particularly including then-CFO Cathie Lesjak"

      Maybe HP should have trusted her before the acquisition, when she was recommending against it?"

      Leo didn't like what Cathie told him (based on his testimony) so ignored her. The question is why the rest of the board weren't questioning her lack of input if Meg trusted her a few months later.

      Other than that, I wholeheartedly agree - Meg and HP appear to be engaged in an arse covering exercise.

  11. Ima Ballsy
    Coat

    Kettle .....

    meet Pot .....

  12. Anonymous Coward
    Anonymous Coward

    I've been trying to keep an open mind on this but as somebody whose company was acquired by HP, this was depressingly familiar :

    "Lynch brought her a constant flow of complaints that HP’s internal processes were hamstringing Autonomy’s efforts to keep its revenues up"

    Yes, so much this! I am amazed that ANYTHING gets sold at HP due to the world class bureaucracy that HP has invented.

    1. Anonymous Coward
      Anonymous Coward

      HP Bureaucracy

      My favourite memory of working in HP was how hard it was to get a server.

      Seriously, let that sink in.

      1. Anonymous Coward
        Anonymous Coward

        Re: HP Bureaucracy

        HP was very bureaucratic. Best to think of it as being like the Civil Service rather than a real business. But your statement has no context. And Context, as Meg is prone to point out, is very important. Which part of HP were you in?

  13. Stevie Silver badge

    Bah!

    I rather like the legal system outlined by Frank Herbert in his Jorj X McKie stories, (Gowachan Law I think but it has been three decades since I read the books) in which Legal Precedent was to be avoided at all costs, to win a case one had to prove not only that the defendant was guilty but that the plaintiff had no culpability, and the winning lawyer had the right to kill the losing lawyer.

    The object being to reduce the number of cases brought to court, given that the costs of doing so were literally ruinous to all concerned.

    Can you imagine?

    "I'm afraid ReallyBig Conglomo Ents has failed to show that Mr Everyman downloaded their content, moreover that RBCE housed said content on what expert witnesses have called a "honeypot" server and have indulged in scattershot subpoenas to scare people into paying "settlements". Thus the Plaintiff has failed to show due cause and isolation of interest."

    "I find for the Defendant, who having represented himself, may now avail himself of the ceremonial dagger should he so wish and ... DEAR GOD, THE BLOOD! THE CARNAGE! OH THE HUMANITY!"

    "Someone get a sling for Mr Everyman's sprained arm. Does anyone have a bucket and mop?"

  14. StuntMisanthrope

    Dissonance vs Bias - The retrial

    So an American exec used to a legislative standard of financial accuracy and a British judge unimpressed. #quantative

    1. StuntMisanthrope

      Re: Dissonance vs Bias - The retrial

      Sorry Judge, my bad on the spelling.

  15. Steve Davies 3 Silver badge

    Quote by Meg "a certain due diligence"

    It applies to buying things as well you know. You failed to do proper due diligence on Autonomy. Admit it and save yourself a whole heap of trouble.

  16. Rajiv_Chaudri

    Entertaining read in the comment section. The ongoing theme: Meg Whitman is one of the most overrated American female CEOs in recent memory. She truly is a legend, in her own mind.

  17. John Smith 19 Gold badge
    FAIL

    To sum up what a judge in a Britsh court room is.

    "I am the law."

    Whitman's playing the "I am the CEO of a major American Corporation. How dare you question my word" routine might scare the s**t out of US judge but that will go exactly nowhere in a UK court.

    I don't like either side in this case but it looks an awful lot like HP did most of this to themselves.

    If everyone (including your own CFO) tells you "This valuation is total bu***hit" and you go ahead either

    a) Everyone is wrong because you know something they don't

    b) You are a complete f**king moron.

    Option b is looking distinctly more likely .

  18. disgruntled yank Silver badge

    IANAL

    "As another judicial slapdown, it was indicative: Whitman was losing the judge’s confidence."

    The judge did not regard her answer as responsive, no. The statement on the face of it appears to me to say nothing about the judge's state of mind otherwise.

  19. Doctor Syntax Silver badge

    Missed opportunity

    “one of the biggest [revenue] misses I’ve seen in my career,”

    You've had a lot of revenue misses in your career, have you?

  20. Anonymous Coward
    Anonymous Coward

    Are we all forgetting the real issue????

    It is fascinating to read about the case.

    I have no special knowledge but I was in the IT industry with a lot of contacts at the time of the acquisition.

    HP bought Autonomy. It was HP's responsibility to make sure they really understood what they bought. I had a friend at IBM who was on the team who spent more than 6 months assessing the option to buy Sun. The due diligence was extreme. When the negotiations got tough (when Oracle countered) the due diligence team were relied upon to ensure that IBM knew how much they wanted to pay.

    A huge discussion point in the industry at the time of the acquisition was "Does Autonomy software actually work?" The claims they made for their special technology were extraordinary. There were a number of respected people who truly understood the nature of database, big data and search who doubted that Autonomy could actually achieve what they said.

    Conclusion - This was always going to end in tears.

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