Ex-Autonomy CFO Sushovan Hussain's part in the accounting badness was 'wildly overblown'

Key witnesses in the Autonomy Trial testified against Mike Lynch and Sushovan Hussain to save their own skins from US prosecutors, Hussain's barrister told London's High Court. Summing up the case for his client, Paul Casey told trial judge Mr Justice Hildyard yesterday that former Autonomy head of US sales Christopher " …

[Pascal Monett]

What was that ?

Hussain's part in "inventing" misleading accounting strategies is said to be both entirely legitimate and "wildly over blown."

I'm sorry, first you're saying that Hussain was entirely justified, then you say that his involvement was "wildly overblown" ? What's the point ? If his shenanigans were legitimate then you don't need to minimize them.

Either you say he was right, or you say he didn't do much. Mixing both sends a very negative image of you just trying to cover something up.

[DavCrav]

Re: What was that ?

"I'm sorry, first you're saying that Hussain was entirely justified, then you say that his involvement was "wildly overblown" ?"

Yes, both are possible. If you play a bit part in a legal undertaking, and somebody claims you played a major role in a criminal undertaking, what you did is both entirely legitimate and overblown.

[Aristotles slow and dimwitted horse]

Re: What was that ?

Happy to be corrected but I think the "wildly over blown" statement was relating to the amount of coverage and focus it was given by HPE and the DoJ as a bellweather to the financial impropriety they are suing over i.e. that they have made a mountain out of a molehill of it in terms of its actual significance to the overall case of fraud, because they have nothing else to really build their case on.

Something like that anyway.

[Doctor Syntax]

"as well as a readable summary of the trial."

It's been very readable so far, for which many thanks.

[theblackhand]

Not only very readable, but easily the best coverage of the case across the UK media (and likely outside the UK as well).

Thoroughly appreciated.

[Intractable Potsherd]

El Reg's coverage of significant legal cases has developed nicely over the last couple of years. The reporting of the Autonomy case has been spectacularly good, and, with a few other cases of interest pending, I look forward to lots more really satisfying reading.

The comments have also been really interesting - cheers, fellow commentards!! - - - >

[gazthejourno]

You're very kind. :-)

[Steve K]

Phrase of the Year 2020?

...at least doubly over-lawyered

An early candidate for "Phrase of the Year 2020"?

[BebopWeBop]

Re: Phrase of the Year 2020?

Yes, a legal friend of mine mentioned that (a) some of the lawyers involved were looking forwards to funding their retirement from this and (b) others (he is an IP man not a financial whizz) were regretting they didnot get in on the 'ground floor'

[amanfromMars 1]

A Future Option for IPO Parties ..... Safe Harbouring Seriously SMARTR Cookies

Mr Justice Hildyard asked: "He couldn't depart from that material under pain of what?"

Sudden death is an almighty incentive, Your Honour, and can be normally extremely effective whenever secrets are guilty and there is no escaping ownership ...... which is smarter spun as a remote proxy stewardship of assets and resources.

Which sort of sums up the Positions of the Competition, and those Roles are Both Reversible and Interchangeable too, and some would tell you that is the worth of what Autonomy sold and HPE bought. And now HPE cannot use it because Uncle Sam has an interest in it not being used without them being granted command and control access. ..... into an Almighty Remote Virtual Leverage.

[jason_derp]

Re: A Future Option for IPO Parties ..... Safe Harbouring Seriously SMARTR Cookies

"Sudden death is an almighty incentive, Your Honour..."

Oh thank glob, amanfromMars1 is here! Sir, I am in no way being sarcastic when I say that I have been waiting with great anticipation for your absolutelly nanners take on this case. You did not disappoint. Also, do not take any of this as meant to be insulting, I unironically and truthfully was excited for this moment.

[Mark Exclamation]

Re: A Future Option for IPO Parties ..... Safe Harbouring Seriously SMARTR Cookies

Actually, this is amanfromMars 1, not the venerable (and unreadable) amanfromMars1 (note the subtle difference. Someone is trying an impersonation. Would the original amanfromMars1 care to confirm?

[diodesign]

Re: impersonation

amanfromMars 1 above is the original amanfromMars.

C.

[Mark Exclamation]

Re: impersonation

Ok, I stand corrected. But it doesn't sound like him!

[Steve K]

Re: impersonation

amanfromMars 1 is now on V1.0 and make marginally more sense with tweaks to the ML/Natural Language generation and also the word capitalisation technology borrowed and refined from the "Bombastic Bob" AI.

V1.0 never really worked properly.

[Intractable Potsherd]

Re: impersonation

So let me get this clear - over the years, we have had amanfromMars, amanfromMars, and amanfromMars 1. amanfromMars and amanfromMars 1 are the same "person", so we now have amanfromMars 1 and amanfromMars1 both (potentially) active on the forums. The question is, if amanfromMars 1 and amanfromMars1 start replying to each other, will it make more or less sense than this post?

[Anonymous Coward]

Re: impersonation

possibly not, and either the universe will implode, or all the amanfromMars variants will either have to kill each other to become more powerful (like in Jet Li' The One) or merge together and die (a la Timecop).

[Delusional]

Its not over until its over...

The US case is pretty clear... at least until the appeal. But how much of the US criminal case effects the UK civil I wonder?

https://www.courtlistener.com/recap/gov.uscourts.cand.305114/gov.uscourts.cand.305114.419.0.pdf

"Sometime in late 2008, Hussain and his co-conspirators set out to improperly inflate Autonomy’s revenue figures to influence market analysts’ projections about its growth and estimates of its market value, in the hopes of an eventual acquisition and a big payday. (Hussain netted $16 million from the HP acquisition.) In Hussain, the conspiracy also included CEO Mike Lynch, as well as Christopher “Stouffer” Egan, Peter Menell, Andy Kanter, and Steve Chamberlain, all executives at Autonomy"

The "pith' of this story seems to be well illustrated (graphic) on Page 4 of the above doc together with the statement 'Government witnesses explained that growth rate is a particularly important determinant of market valuation for a tech company, and ultimately of the price that company can command in an acquisition. Accordingly, falsely reporting increases in revenue will tend to lead to significant exaggerated valuations"

While its been (temporarily) decided that this all adds up to a crime in the US, would have been a crime in the UK, and with retard to this trial, does it equalup to "I want my $5B back please?"

[ExampleOne]

Re: Its not over until its over...

Surely the fraud would be misleading the due diligence teams checking for funny accounting games leading to the buyer over estimating the valuation based on the resulting inaccurate due diligence report? Except that report never was written so can not have misled people who also never read the interim report.

The core of the case, AIUI, is Autonomy misled HP about their company value? I don’t see how this can hold if A) The HP CFO was worried the price was too high, and B) HP never actually bothered to complete their due diligence and read the report.

[Jon 37]

Re: Its not over until its over...

They're not getting their $5B back. The senior people in HP who grossly overpaid for Autonomy want to claim that's someone else's fault, and they were blameless. So they're attacking Autonomy's old management every way they can, claiming that Autonomy lied about how well they were doing, and that's why HP overpaid. That includes both civil and criminal charges. They just need to get something to stick - and preferably a lot of things.

For HP this is purely a blame game. For Autonomy's old management this is a legal nightmare.

[Anonymous Coward]

Re: Its not over until its over...

Hard to have sympathy for any of the lot. All a bunch of ahole 1%ers screwing each other over and eventually the proles I am sure.

[Anonymous Coward]

Re: Its not over until its over...

"The "pith' of this story seems to be well illustrated (graphic) on Page 4"

Having skim read the document, looking at the graphic, my first question would be whether there was anything that caused the adjustments. A portion (possibly a significant portion) of the adjustments are likely due to Autonomy's own acquisitions. The KPMG due diligence report hints that Autonomy had outstanding post-acquisition adjustments to make around Iron Mountain, and in the period listed in the US court documents, there is also Interwoven, CA Information Governance and MicroLink to consider.

Put another way - while the graph shows what HPE wants the courts to see, does it actually match reality?

I'm ignoring the hardware part of the graphs for the moment - there are further arguments around that including the extent of HP's acquisition killing sales that suggest it is either minor or benefited Egen rather than Autonomy as a whole.

[I ain't Spartacus]

Re: Its not over until its over...

Delusional,

It's obviously hard to know what's true and what isn't, because there was no trial in the USA. So the prosecution argument and evidence were never tested. If I were a cycnic I would suggest they gave immunity to a bunch of witnesses in order to get them to testify against the bigger fish, and intimidated the bigger fish into pleading guilty to get deals with the threat of ludicrous sentences.

The lack of compelling evidence in the UK trial suggests that I'm right to be cynical. But I await judgement because the devil is in the detail and while El Reg have been brilliant on their coverage of the trial and witnessses I don't know how good they've been on the written evidence. And this being a civil trial without jury - the judges should be as swayed by the written evidence as by what happens in court. Tough you'd expect the barristes to ram home their best written evidence in verbal statements too.

This being a civil case the burden of proof is lower. Decided "on the balance of probabilities" rather than, "beyond reasonable doubt." Given that, if this trial fails and that the UK Serious Fraud Office declined to even try to prosecute - the US case is going to look pretty bloody flimsy.

However, I doubt the US appeal system will have much sympathy for someone who pleaded guilty out of fear of being found guilty and spending the rest of their life in jail, so I suspect he'll end up having a lot of time in prison to regret not contesting the case. And Lynch will have to avoid going to the USA - because who likes admitting they were wrong?

[macjules]

"We take a rather different view over here"

Pointedly, the judge observed later on: "We take a rather different view over here… we rather regard any resort to the privilege against self-incrimination as a black mark."

Dear God, that a UK judge actually has to say that in a UK court of law. I am so looking forwards to, "We find against HPE and furthermore refer this case to the Crown Prosecution Service for further action". What a truly despicable company (not that Autonomy were much better mind).

[Venerable and Fragrant Wind of Change]

Re: "We take a rather different view over here"

Um, the reference there seems to be to Hussain, whose evidence was reported as having been affected by the risk of prejudicing his US appeal.

[DavCrav]

Re: "We take a rather different view over here"

"Um, the reference there seems to be to Hussain, whose evidence was reported as having been affected by the risk of prejudicing his US appeal."

But the judge should, and almost certainly is, cogniscant of the fact that Hussain is appealing the judgment, and so doesn't want to be caught in a perjury trap. If POTUS can use that argument, surely Hussain can.

I guess the point is that the more you discuss a case, the more likely it is to say something that, possibly accidentally, contradicts something said earlier, especially when discussing recollections of past events. "I don't remember" and "I do remember" appear contradictory, but are not if spoken at different times. But a US court will throw you in jail for that sort of flip flopping, especially if you are a foreigner and have a name like Hussain. (Of course, the US legal system is definitely not corrupt, xenophobic or racist.) Hence shutting up in the US system is an absolute must.

[Anonymous Coward]

Re: "We take a rather different view over here"

While I can understand the Judges comments (i.e. in line with UK law) I can also understand Hussain's choice to take the risk.

Hussain has been convicted of wire fraud based on sending details of Autonomy's financial records to HP as part of the deal. That became fraud in HP's eyes post-acquisition because they have found fraud - the only links to actual fraud HP has identified is Egen may have padded his numbers and informed Hussain/Lynch with a single e-mail (there may have been further communication but HP has presented a single, unacknowledged, e-mail).

If that's the standard of fraud that the US government will prosecute, any account passing financial details to a US company for an acquisition is potentially guilty of wire fraud if the acquiring company later disagrees on value.

If Hussain testified, the chances of him proving his guilt in the eyes of US courts by blinking too fast, breathing at the wrong speed or giving someone from HP a funny look increases exponentially and thats surely worth another 100 years on top of what he has already been given...

[Lord Elpuss]

Re: "We take a rather different view over here"

" (not that Autonomy were much better mind)."

It remains to be seen whether Autonomy acted improperly in any way. Given the complete farce that is the US legal system, the only case that counts is the one that's currently running in the UK, and it hasn't concluded yet.

[Deimos]

Autonomy was always a strange proposition

After some colleagues were thoroughly indoctrinated at an autonomy event I got nagged into a meeting with them.

The spiel was lovely but I never actually managed to find out what they did and why you needed it. Then they sent us a quote for twice our whole yearly IT budget... I then realised what it did, it identified companies with Too much money and rectified the situation.

[John H Woods]

Re: Autonomy was always a strange proposition

I found one of their powerpoints once on an old system and "read" it with a strange fascination --- it was like the Voynich Manuscript: looks like it should make sense to someone but eventually you have to consider the possibility that it's all just a big joke.