Mike Lynch cleared of fraud charges in UK
Former CEO of Autonomy, Mike Lynch, has been cleared in the US of all fraud charges arising from the $11 billion sale of the company to Hewlett-Packard (HP) in 2011.
Dr Lynch, who faced multiple counts of fraud, said he was “elated” and “grateful to the jury for their attention to the facts” throughout the 10-week trial.
His appearance in the San Francisco court marks the end of a 12-year legal battle after Dr Lynch was accused of falsely inflating revenues at Autonomy in a deal that ranked as the largest-ever takeover of a British technology business at the time.
However, just a year later, HP wrote down the value of Autonomy by $8.8 billion, alleging it had discovered major accounting improprieties and laying the blame for these squarely at the CEO’s feet.
The Serious Fraud Office (SFO) became involved in the acquisition’s fallout but in January 2015, the SFO called off its investigation of Autonomy, saying it had “insufficient evidence for a realistic prospect of conviction”.
Undeterred, a successor company to HP, HPE, then began a civil case, suing Dr Lynch in the High Court, where HPE won in 2022, although damages have not yet been decided, as the judge indicated that the $5 billion claim was excessive.
Then in 2018, US prosecutors brought charges against Dr Lynch for conspiracy to commit wire fraud, 16 counts of wire fraud and securities fraud, although the securities fraud charge was dropped.
Dr Lynch, who has always maintained his innocence, fought against extradition to the States until January 2022 when then Home Secretary Priti Patel granted it.
During the trial, which began in March, Dr Lynch’s legal team argued that HP had failed to investigate the deal thoroughly and had mismanaged Autonomy.
During the trial, Dr Lynch said that he had had little knowledge of the company’s accounting practices, as his background was technical and that he had often delegated tasks.
He was also scornful of the prosecution’s witnesses, describing them as a “parade of witnesses I’ve never met.”
Commenting on the innocent verdict, Roger Isaacs, National Technical Director of NIFA, said: “This ruling will no doubt be a huge relief to Dr Lynch albeit that he still faces having to pay substantial damages having lost the civil litigation. Even if these are reduced to well below the sum of $5billion that was claimed, he may well face bankruptcy having been reported to have made only £500million personally from the sale of autonomy.
“Even if the damages are ultimately assessed at a sum more than Dr Lynch can afford, he may be able to negotiate a settlement that allows him to avoid bankruptcy. This could be a good outcome for creditors whose returns from bankruptcy are often only a few pence in the pound especially if significant fees are incurred by the trustee in bankruptcy in relation to the costs of realising assets or, where necessary, in relation to funding the cost of forensic investigations and asset tracing”
Sources: Guardian, Reuters
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