US Department of Justice is investigating allegations of accounting fraud at Autonomy

HP has revealed that the US Department of Justice has been investigating fraud allegation at Autonomy since last month.

HP has revealed in a securities and exchange commission legal filing, that the US Department of Justice has been investigating fraud allegation at Autonomy since last month.

HP bought Autonomy in 2011 for $11.7bn, but in November, claimed former managers at the UK software firm had used “accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company” to boost its price before the acquisition went through.

As a result, it wrote down the price of the asset by $8.8bn and referred the accused managers to the US Securities and Exchange Commission (SEC) and the UK Serious Fraud Office.

HP has now confirmed that the US Department of Justice opened its investigation into Autonomy soon afterwards.

After HP’s public announcement of the allegation in November, Autonomy founder, and former CEO Mike Lynch wrote an open letter to the board of directors at HP. He was shocked that they hadn’t contacted him prior to publishing, and he also stated that he rejected all allegations of impropriety.

Lynch claimed he had still not had any details from HP, bar the public statement it made last week. He called for a breakdown of the write-down figure, specifically the $5bn impairment charge.

Two of the big four accountancy firms were also named in the lawsuit, claiming damages for HP shareholders following the write-down of Autonomy.

Autonomy was regularly audited by Deloitte, and HP boss Meg Whitman said her firm used KPMG to check due diligence on these reports.

 

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This information is really good and thanks a ton for sharing it

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