Looking for the evidence
The former Finance Director of UK software group Autonomy has been accused by US prosecutors of perpetrating an elaborate financial fraud designed to ‘deceive investors, analysts and auditors’. Sushovan Hussain is alleged to have been the mastermind behind a cover-up of the real state of Autonomy’s finances before it was acquired by Hewlett Packard (HP), which paid $11bn (£8.7bn) for it five years ago, making it the biggest ever takeover of a European technology group.
According to the indictment, Mr Hussain ‘made false and misleading statements about Autonomy’s finance, put fraudulent entries into the company’s books, issued false and misleading quarterly and annual reports and intimated, pressured and paid off people who had raised complaints or criticised the firm’s financial practices and performance’.
HP began an investigation into what had happened before the purchase after it made a $5bn (£4bn) write-off in 2012. The company is currently suing Autonomy’s founder, Mike Lynch and Mr Hussain through the London courts for damages of $5.1bn. Mr Lynch launched a $150m counterclaim against HP, alleging that its “false and negligent statements” about him have damaged his reputation. In fact, there has been a welter of allegations, investigations and lawsuits both here and in the US since the alleged improper activity first came to light.
It will all boil down to evidence, which both parties are strenuously amassing. Mr Hussain has retained elite attorney John Keker to defend him in the US and he maintains that Mr Hussain has defrauded no one and “properly applied accounting rules for a UK company”. In fact, the Serious Fraud Office (SFO) dropped its case against both men, which had begun in 2013, last year, citing “insufficient evidence for a realistic prospect of a conviction”.
Forensic accountants on both sides will be looking at every shred of evidence that has been uncovered and for any that has yet to come to light to support their clients’ respective cases.
Author: Roger Isaacs, 2 December 2016