Hewlett-Packard Company (NYSE:HPQ) has alleged former executives of Autonomy Corp of Fraud. According to Hewlett, the former executives of Autonomy falsely reported $709 million in revenue over two and a half years before the company was acquired by Hewlett for $11 billion.
Hewlett has sued Autonomy’s former CEO Michael Lynch and former CFO SushovanHussain and is seeking almost $5 billion in damages. In the court filing, Hewlett has alleged that Autonomy sought to increase revenue and market valuation through improper practices. Autonomy allegedly indulged in practices like engaging in suspicious licensing deals with partners, reselling computers made by other companies at a loss and restructuring data hosting deals.
Autonomy reported nearly $2 billion in revenue form 2009 to 2011; Hewlett has alleged that win that period more than $700 million was falsely booked. The biggest chunk of the false booking is $318 million which included deals where Autonomy hosted other companies’ data on its servers and sold its products through resellers.
The filings also contain allegations that Autonomy’s U.S. CFO Brent Hogenson was dismissed for raising concerns about the company’s transactions. Lawyers for Lynch have said in a letter to Hewlett’s legal team that Hogenson was dismissed by Autonomy’s chairman, and they had nothing to do with the firing of Hogenson.
Hewlett-Packard Company (NYSE:HPQ) has further claimed that both Lynch and Hussain did not do their fiduciary duty as directors of Autonomy. Hewlett has also claimed that Lynch broke his obligation as an employee of Autonomy and Hussain misled the audit committee of Autonomy repeatedly.
Lynch has responded to the allegations of Hewlett saying that Hewlett lacks the evidence to back up its claims. He further added that Hewlett was just looking for a scapegoat to blame for its own incompetence and errors. Both Lynch and Hussain have acknowledged the particulars of the claim.
