Yeah, Autonomy's ex-chief financial officer is still up for wire fraud A judge has thrown out an appeal by Autonomy's former chief financial officer, who had asked that the felony fraud charges relating to his role in the ill-fated multibillion-dollar sale to HP be dismissed. Sushovan Hussain had argued in the San Francisco Northern California district court that the wire fraud charges against …
If you are fooled by a used cars salesman you will call him an arsehole, if you are the salesman you will smile at the arsehole buyer. And as an outsider I think I can spot two.
And I truly can't figure out if the guy in the icon is pulling out his wallet to pay or pushing it in with all the money he just got.
Was it the British Invasion? Diana, Middleton mania that drove ZERO accounting "the British are trustworthy old school"? Or were they relying on falsely inflated figures from new growth product I AR, like Aurasma - a totally stolen bit of IP?!
Buy a high-street greengrocers with assets of 2k, and pay 10k, accounting supposes the 8k difference must be 'goodwill', which you contrive to revalue or write-off afterwards. How was this different? In the big league, someone does 'due diligence' - who was that? Often that's confirmed by Pro-Accountants - who were they? Caveat Emptor is probably not a USian expression. Actually, I thought Autonomy once had something special, and maybe that somehow evaporated (like EDS?) in the transition.
......
There seem to be two elements to this 'alleged fraud'.
1. Some items sold were actually hardware and HP seemed to think they were software (great due diligence guys), as a consequence a whole raft of items were booked at the wrong profit margins.
2. Forward booking of profits. Here is a case of 'for example' I sell you a contract for 5 years worth of licence/services/blowjobs (delete as appropriate). Instead of booking the revenue and profit over the five year contract life they were booking it all in year/quarter one, no you might think seems fair as we have a contract, but from an accountancy viewpoint you can't book it till the period in question to allow for things like falling outs/going busts/specification change.....etc.
The biggest laugh here without any shadow of a doubt is which accountancy firm did the due diligence on the deal and Autonomies accounts? The partners responsible for the HP transaction should be publicly flayed then bathed in vinegar.
Isn't the irony here that forward booking of profits before their actual realisation (i.e. payment) was the cause of Enron's demise... with Autonomy being the software that helped uncover said fraud by analysing the communication between traders in various departments and spotting unusual trends?
which accountancy firm did the due diligence on the deal
Deloittes. And KPMG, according to Reuters
> from an accountancy viewpoint you can't book it till the period in question
Under US GAAP standard or UK / International IFRS standards ? Also, under which year of standards? Revenue recognition in particular has been / is undergoing major changes in recent years - it is still (as far as I know) based on when the work is done (for service contracts) rather than when/if you get paid.
At the end of the day HP and/or the accountancy firm that did the due diligence didn't realise a UK-based UK-listed company didn't use US GAAP standards, well duh. There's always the possibility that Autonomy cooked the books by UK standards/law too, but SFO has closed that investigation due to finding insufficient evidence.
Due diligence is an oxymoron, both words. Due should mean you do it when it needs to be done; diligence means you do it properly. Accountats don't do either, they are always in after the facts and they are not paid to be diligent, they are paid to be a facesaver.
In addition, the board of HP and their sherpas are supposed to be experienced. If they were when they looked at the deal they should have known that ALL software sellers puff up sales as soon as the contract is signed. That is when the work starts, not when the operation actually works. In the case of Autonomy there was a requirement to spend x months with consultants massaging the software against the data to be managed.so that it MIGHT work.
Interesting that someone mentioned another puffed up outfit that went down the toilet, Enron, they were an autonomy user.
"Sushovan Hussain had argued in the San Francisco Northern California district court that the wire fraud charges against him represented "an impermissible extraterritorial application of federal criminal law," arguing the case was built on events that took place outside the country."
This smells like: "I did it but you can't touch me" using lawyer weasel wording.
It does. And it's also total BS as the judge pointed out since he did use US-based equipment to send his messages. But it underlines the problem in the world today about communications (including Internet) fraud. Some criticize (and in some cases, probably correctly) the US for "policing the world" when it comes to this kind of thing. So when someone in another country defrauds or robs US citizens using modern communications, often the US will step up and try to bring them to justice, and get criticized for it. But what's the alternative? Do nothing?
Right now, we have a world of sovereign states, analogous to individual persons, in a way. There is no real "world government" to bring such a crime to the attention of. So if there is to be a price to be paid for theft, what we have is a sort of international vigilante justice in which one country will try to prosecute someone from another country in their own courts, either civilly or criminally - and get criticized for it. But what's the alternative?
Perhaps nations should come together and create some sort of world court to settle these kinds of problems created by the advance of communications technology.
Yeah, total BS and the defence lawyers would absolutely know the facts of this.
It's long overdue that such false presentation to the Court/Judge is penalised, severely. Against those that make such false claim ie the lawyers.
You can't blame the client for trying but a competent and honest lawyer would say it's a non starter.
Americans don't need to invite anyone else to the World Court like they don't to a World Series.
The due diligence by KPMG should have highlighted the differing accounting treatment of revenue to the HP Board (not that they weren't already aware according to documents released). But this still does not explain how the classification of ~£5m in revenue (IIRC) in a different manner to our US brothers equates to $11b write down in value. If indeed the revenue was misstated by £5m then that is one heck of a multiplier to get to $11b
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