Former HP boss Whitman says ‘not protecting herself’ in Autonomy fraud allegation
By Paul Sandle
LONDON (Reuters) – Former Hewlett-Packard boss Meg Whitman denied on Thursday she was trying to protect her own reputation when she accused the leaders of Autonomy, the British software firm HP acquired in 2011, of a fraud that inflated its value by $5 billion.
In a second day of testimony at London’s High Court, Whitman was asked by the counsel for Mike Lynch, Autonomy’s founder and former CEO, why she went public with the claim before questioning Lynch or Autonomy’s auditor Deloitte.
“It was about protecting and reinforcing your reputation and you were doing so at the expense of Dr Lynch and (former CFO) Mr Hussain?,” Robert Miles asked Whitman.
“That’s not correct,” she replied.
“We were not trashing someone’s reputation,” she said. “We were reporting the facts as we knew them and we had been defrauded by Autonomy.”
HP bought Autonomy for $11.1 billion in 2011 as the centrepiece of an unsuccessful pivot to software by Leo Apotheker.
Little over a year later, his replacement Whitman wrote off $8.8 billion, $5 billion of which she put down to accounting improprieties, misrepresentation and disclosure failures.
HP is pursuing Lynch and his former colleague Sushovan Hussain for $5 billion in London’s High Court.
Lynch, who has counter sued, has denied the charge, saying that Autonomy’s value was damaged by mismanagement by HP.
Whitman was questioned about how HP had calculated the $8.8 billion write down announced in 2012.
Miles said HP had just “plucked a number out of the air”, and he asked how $2.3 billion of synergies – some of the value that HP had hoped to realise by combining Autonomy’s big data capabilities with its own technology and sales machine – had appeared in the documentation overnight and after Whitman had asked if synergies should be included.
Whitman said she had left the calculations “actually to (CFO Cathie Lesjak) and the accounting team, which is the appropriate thing to do.”
She said HP made the allegation of fraud after an internal investigation and a forensic review into Autonomy’s accounting practices before it was acquired by HP.
“We had three months of investigation, we knew exactly what had transpired here,” she said.
She said there was “no way” she would have asked Mike Lynch what he thought: “That would have been inappropriate.”
Lynch’s counsel told Whitman to “stop making speeches” in response to lengthy answers from the U.S. executive, in which she said she was confident that fraud had occurred.
Judge Robert Hildyard eventually intervened when Whitman categorically stated it was a case of fraud.
“We knew exactly what had gone on here,” she said, to which Hildyard said: “Then I wouldn’t have anything to do, would I?
“Things have to be proven.”
Hewlett Packard Company in 2015 split into two separate publicly traded companies – HP Inc. and Hewlett Packard Enterprise.
(Reporting by Paul Sandle; Editing by Alexandra Hudson)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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