HP details how it was tricked into paying $11B for Autonomy by former execs

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Hewlett-Packard today laid out in the most detailed manner yet how it says it was tricked into paying more than $11 billion for the British software firm Autonomy in 2011, an acquisition that eventually led to the firing of HP’s chief executive at the time.

In a series of court filings, HP, for the first time, connected the dots of many previously disclosed allegations into a larger narrative it says amounts to “extensive and extraordinary evidence of fraud on the part of senior management of Autonomy,” including its former CEO Mike Lynch and former CFO Sushovan Hussain.

The alleged fraud included tens of millions of dollars worth of “imaginary deals, accelerated revenues and misrepresentations” regarding Autonomy’s financial situation. The lies, HP alleges, inflated Autonomy’s share price and the perceived fair price for the acquisition. A year later, HP wrote down the value of Autonomy assets by more than $8 billion.

The disclosure is the latest step in a complicated shareholder derivative lawsuit before the court, a case in which HP has proposed a settlement. In July, Hussain, intervened in the case, asking a judge to reject the settlement. HP has said it plans to sue Hussain and other former Autonomy executives, including Lynch.

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