HP-Autonomy acquisition under US govt investigation

HP-Autonomy acquisition under US govt investigation

Summary: Hewlett-Packard confirms the U.S. Department of Justice has started an inquiry into its beleaguered Autonomy acquisition, following news it uncovered fraudulent accounting on the latter's part.

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The U.S. federal government has initiated an inquiry into Hewlett-Packard's US$11.1 billion acquisition of Autonomy, which allegedly posted fraudulent accounting and misrepresented its financial performance. 

In its annual report released Thursday, HP confirmed the U.S. Department of Justice (DOJ) had "opened an investigation relating to Autonomy" and said it would cooperate in the inquiry. The IT giant acquired Autonomy for US$11.1 billion in August 2011, but last month announced it had uncovered "serious accounting improprieties, disclosure failures, and outright misrepresentations" on Autonomy's part. 

HP had pointed to some former members of Autonomy's management team as those responsible for the "willful effort to mislead investors and potential buys" which, it said, impacted its ability to "fairly value" the acquisition. Following the allegations, Autonomy's founder and former CEO Mike Lynch set up a Web site as a platform to support his rebuttal of HP's charges, saying the latter had mishandled the company arfter acquiring it. 

In an update posted Friday on his Web site, Lynch said HP had failed again to provide detailed calculation on its US$5 billion write-down of Autonomy or publish an explanation of the allegations it made against his former management team.  

"Furthermore, it is now less clear how much of the $5 billion write-down is in fact being attributed to the alleged accounting issues, and how much to other changes in business performance and earnings projections. This appears to be a material change in HP's allegations," he said. 

Lynch again dismissed any claims of improprietry and pledged to cooperate with the DOJ investigation. "We continue to reject these allegations in the strongest possible terms. Autonomy's financial accounts were properly maintained id in accordance with applicable regulations, fully audited by Deloitte, and available to HP during the due diligence process."

Former CEO Leo Apotheker earlier this month said HP's board of directors should take responsibility for the deal, arguing the CEO alone would not be able to decide on a major acquisition in isolation.

Apotheker, who was CEO at the time the Autonomy merger was inked, said: "The HP board, led by its chairman, met many times to review the acquisition and unanimously supported the deal, as well as the underlying strategic objective to bolster HP's market presence in enterprise data." The CEO was ousted in September 2011.

For more coverage about HP and Autonomy on ZDNet:

Topics: Hewlett-Packard, Government US, Legal

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently a freelance blogger and content specialist based in Singapore, she has over 16 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings.

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  • Leo brought the deal to HP

    HE sold it to the board. He championed it and now is pushing blame to the board, who should shoulder the blame for hiring the most incompetent CEOs in the history of business
    flyguy29