Lynch ponders US showdown with HP accusers
Cambridge technology entrepreneur Dr Mike Lynch is drawing up fresh battle lines for an intensified fight with HP in the US and UK courts.
Dr Lynch, his high-profile lawyers and companies in his Invoke investment stable in Cambridge have come out with all guns blazing in response to a US Department of Justice indictment accusing the former Autonomy CEO of 14 counts of fraud. They carry a potential 20-year jail sentence in the US.
Dr Lynch can choose to travel to the US voluntarily to face arraignment where bail conditions would be set. The alternative is to sit tight and see if extradition proceedings are set in motion.
The feeling of people close to the Lynch advisory team is that he will choose to beard the legal lions in their den; the belief is that by going voluntarily to the US would reflect the confidence of his lawyers in their case. The timing of events remains unclear.
The same applies to an appeal lodged by former Autonomy finance chief Sushovan Hussein into his US conviction on multiple counts of fraud.
The appeal process is ongoing and will take some time, Business Weekly understands. His sentencing hearing has also been postponed and no date has yet been forthcoming.
The cases against both men arise from accusations made by HP that Autonomy effectively ‘cooked the books’ ahead of the Cambridge company’s sale to the American tech giant for $10.2 million in October 2011; the acquisition valued Autonomy at around $11.7m.
Dr Lynch’s attorneys, Chris Morvillo of Clifford Chance and Reid Weingarten of Steptoe & Johnson, have pulled no punches in their response to the US charges and say the entrepreneur will not be made a scapegoat for HP’s “failures.”
They say: “This indictment is a travesty of justice. Mike Lynch is a world-leading entrepreneur who started from nothing and spent his life building a multi-billion dollar technology business that solved critical problems for companies and governments all around the world. These stale allegations are meritless and we reject them emphatically.
“This case is unsupportable. It targets a British citizen with rehashed allegations about a British company regarding events that occurred in Britain a decade ago. It has no place in a US court. “The claims amount to a business dispute over the application of UK accounting standards, which is the subject of a civil case with HP in the courts of England, where it belongs.
“There was no conspiracy at Autonomy and no fraud against HP for the DoJ to take up. HP has a long history of failed acquisitions.
“Autonomy was merely the latest successful company it destroyed. HP has sought to blame Autonomy for its own crippling errors and has falsely accused Mike Lynch to cover its own tracks.
“Mike Lynch will not be a scapegoat for their failures. He has done nothing wrong and will vigorously defend the charges against him.” A further statement from the attorneys does not exactly cover Autonomy’s then accountants, Deloitte, with glory – quite the opposite.
It reads: “Autonomy was surrounded by sophisticated accountants and audit professionals, who were expert in the differing UK and international accounting standards.
“Dr Lynch, who is not an accountant, was entitled to rely in good faith upon the collective judgment of Deloitte, Autonomy’s own finance department, and its audit committee of independent directors.
“As a FTSE 100 company Autonomy’s accounts were heavily publicly scrutinised, and HP conducted its own due diligence. It simply strains credulity to contend that a fraud of the scale alleged was able to thrive undetected at Autonomy. Dr Lynch is not guilty of any crime and looks forward to his vindication.”
National media reports that Dr Lynch had left Invoke portfolio companies ‘in the lurch’ by stepping aside while he fights the legal action have also been dismissed by several of the executives running the businesses.
A spokesperson for Invoke Capital said: “Invoke is entirely self-funded, and does not rely on funding from Mike Lynch at all. The companies Invoke has invested in are all independent entities with their own financing. It is very much business as usual and there should be no impact on them.”
That view was backed by executives at Sophia Genetics, Darktrace, Luminance and Featurespace.