US giant, HP issued an explosive news release last week. HP had been conducting an internal investigation in relation to its acquisition last year of UK entity, Autonomy and it did not like what it had found.
“HP is disappointed,” said the news release, “to find that some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition by HP. These efforts appear to have been a willful effort to mislead investors and potential buyers…”
HP has apparently referred the matter to the US Securities and Exchange Commission’s Enforcement Division and the UK’s Serious Fraud Office for civil and criminal investigation and has also announced its intention to seek damages through the courts in due course.
In the week since, Mike Lynch, former Autonomy boss, has gone on the offensive, denying the allegations made.
Fair enough you might say. If innocent, denial is a good thing and getting in quick at the earliest opportunity with a strong rebuff, makes the denial all the more compelling.
But Lynch hasn’t stopped there. Reports in the press (in the Telegraph Newspaper for instance) this last week have had Lynch on the one hand playing the tough guy, stating that he would be summoning the HP Chief Executive, Meg Whitman to the UK to explain herself, whilst on the other hand, showing him apparently willing to be drawn on the details of some of HP’s allegations, seeking to play down the materiality of the complaints made.
Do you know, he may might be right in some of what he says, but surely he cannot be pinning his hopes on winning a PR war of words as a means of making this all go away. HP has involved the SEC and the SFO. It doesn’t really matter from this point on what HP does or doesn’t want in all of this, it’s too late; the monster has been created and now will have a life of its own.
The papers last week were claiming that Lynch had not as yet hired a lawyer to help him protect his interests. I hope for his sake he hires someone quickly, but in the meantime, a word to the wise: keep your mouth shut, Mike. If HP are wrong about you, believe me, your time will come.