High Court grants HP £700 million in restitution for fraud committed by a deceased tycoon in the UK
Hewlett Packard Wins Landmark Case Against Autonomy Founder Mike Lynch
In a significant legal victory, Hewlett Packard Enterprise (HPE) has been awarded a substantial sum in damages from the sale of Autonomy, a British software company, in 2011. The High Court of Justice in England ruled largely in favour of HPE in a civil case against Autonomy, finding that the company had materially misrepresented its financial position before the acquisition.
The court's decision comes after years of legal battles between HPE and Mike Lynch, the founder of Autonomy who was once hailed as the "British Bill Gates." The court found that Autonomy's financial disclosures were materially false or misleading, directly influencing HPE's acquisition decision at an inflated price.
Following the sale, Lynch faced fraud charges in the United States. However, the focus of the British case was on allegations that Autonomy and its executives, including Lynch, engaged in fraudulent accounting practices to inflate Autonomy’s financial results. These practices involved overstating revenues and hiding costs, which painted a false picture of the company’s health and growth prospects.
The court's liability judgment in May 2022 found that Autonomy’s financial disclosures were materially false or misleading, directly influencing HPE’s acquisition decision at an inflated price. As a result, HPE suffered a loss of approximately £646 million (around $985 million), reflecting the difference between the actual purchase price and a hypothetically corrected price if Autonomy's financials had been properly presented.
Despite the court's ruling, Mike Lynch had prepared a written reaction to the judgement before his sudden death in August 2024. Lynch's yacht, anchored off Porticello, near Palermo, was struck by a mini-tornado before dawn, resulting in his death along with his daughter Hannah and others.
The final amount of HPE's damages will be determined at a further hearing, scheduled for November. The hearing will also address matters such as interest, currency conversion, and whether Lynch's estate can appeal the decision.
It is worth noting that Hewlett Packard recorded nearly $9 billion in write-downs, including over $5 billion due to accounting manipulations by Autonomy's directors before the sale. The court's ruling has been a substantial legal defeat for Autonomy and Mike Lynch, with a judgment supporting HPE's claim that it was defrauded into overpaying for Autonomy by hundreds of millions of pounds.
[1] The Guardian: Hewlett Packard wins $5bn lawsuit against Mike Lynch's Autonomy
[2] BBC News: Autonomy founder Mike Lynch 'lied to HP', court rules
[3] Reuters: Hewlett Packard wins $5 billion lawsuit against Autonomy's Mike Lynch
Technology played a significant role in the legal battle between Hewlett Packard Enterprise (HPE) and Autonomy's founder Mike Lynch, as the dispute centered around allegations of fraudulent accounting practices that manipulated Autonomy's financial statements. Furthermore, the impact of these practices on the technology industry extended beyond just HPE, as the court's ruling set a precedent for honest financial disclosures, preserving the integrity of business and finance within the industry.
