US prosecutors slam Autonomy tycoon's attempt to get charges tossed The lengthy legal story of Autonomy co-founder Mike Lynch took another turn this weekend as prosecutors snapped back at attempts to have criminal charges thrown out of court. The 57-year-old UK tycoon is facing US prosecutors' allegations that he inflated the books at Autonomy to generate a higher sale price for the business, …
Let's see: man has assets. Man inflates value of assets on the books to personal benefit. Man walks away with cash (in this case, over $500 mil, according to The Guardian) thanks to sale of overvalued asset. Man seeks further fame and fortune, only to be handed an indictment on His Majesty's pleasure.
Did he get his training on Celebrity Apprentice??
CEO knowingly overpays for a company, doesn't read the due diligence report from the auditors and disregards the protestations of the CFO. CFO knew HP was overpaying for acquisition and despite her grave misgivings allows the company to go ahead with it anyway. Board - including Chairman Ray Lane and Board Member Meg Whitman - aware of all of this yet allows company to make acquisition. $10bn of shareholders funds squandered in an absolutely foreseeable way. American execs look for scapegoat. UK CEO? That'll do even more nicely.
CEO knowingly overpays for a company ...
Indeed.
I was about to go find one of the many many posts on the subject (flogged to death over e few years now) to cut-paste it and here you are.
Thank you. 8^D
Please count my upvote as worth x10 and have a couple on me.
But there things no one asked or is asking about:
Are all those involved on the HP side of this absurd fiasco really stupid DHs?
The list is quite long and I won't type it again but they are all bigshot CxOs, lawyers, bankers and accountants.
The accountants got off with a slap on their ink stained shirt cuffs and the rest are all still working as if nothing had happened.
And Mike Lynch ...
What is the guy, the Pied Piper of Idiotic Acquisitions? A master hipnotist? 8^D
I read somewhere (cannot recall where/when) that a small group of HP shareholders filed a suit and were happy to shut their trap for what ended up being small change.
Small change because they were probably few and small shareholders which were offered 2X their holdings to desist and go home.
But the value of their holdings can only account for a very small drop of crap in the shitload of cash that was sent down the toilet via the absurd 80% writedown.
For a long time I thought that HP had been in the hands of idiots but as time went by and the more I thought of it, the more it started to make less and less sense.
How can it be that in a country (like the US) where you can practically sue a dog for barking at you, this did not bring about the fall of HP and multi-million class action lawsuits everywhere?
It is often said that to find the cuprits you have to follow the money or the broad ...
Right.
Let's follow the money:
Who did all the cash blown away actually belong to?
ie: who were the parties that apparently lost the most money in this charade?
.
The accountants got off with a slap on their ink stained shirt cuffs and the rest are all still working as if nothing had happened.
Those are seperate charges. The accountants fraudulently obtained ink to the value of $42bn (ie 42ml) from HP, and fraudulently avoided being enrolled in HP's monthly buyers club.
I'm kinda hoping the judge just goes "caveat emptor!" and fines HP for wasting the court's time. Also something I've forgotten.. Did Autonomy's software ever actually work? I remember looking at it yonks ago and thinking if it did, it could be useful.
Did Autonomy's software ever actually work?
We (OpenText, now) still sell it, and people still buy it. You can see that in the last Micro Focus annual report, and presumably in the next OpenText one. I don't work in that unit, but I suspect that, like most software (including the stuff I do work on), it solves problems for some people who try it, and not so much for others. I saw a tech presentation and demo once which looked good, but you know how it is with demos.
What I don't have a good sense of is how much it complements or overlaps with OpenText's other "enterprise information management" products, which after all is where OpenText got its start — spun off from U Waterloo to commercialize the TEXT indexing system created for the OED, if memory serves. (Thirty years ago, when I was a grad student, a professor gave me a copy of TEXT on a floppy disk and photocopied documentation to play around with. It's in a box in my office somewhere.) Historically Micro Focus generally kept overlapping products alive; we still sell, and regularly update, the RM and Acu COBOL products alongside the "flagship" MF COBOL, for example. But I have no idea whether OT will want to keep the Autonomy product in the long term if it isn't strongly differentiated from our other information-management products.
All my opinion, not official OpenText anything.
Thanks for your appreciation.
You asked: Are all those involved on the HP side of this absurd fiasco really stupid DHs??
Answer: Yes and No. Yes, they're criminally incompetent, but on the other hand No, they are playing the system and getting away with it. Throughout this, Meg was carefully lining herself up to be the next CEO which was also useful for managing damage limitation for herself, Ray Lan and the CFO. Her appointment as CEO (quoi moi?) and - I would also contend - the appointment of Nieri as her successor was also part of the scheme. Nieri's only qualification for the job? That he would never criticize Whitman and Lane. Next?
You asked: Who did all the cash blown away actually belong to?
Answer: Well my employee stock options went down in value by $100K due to the collective actions of these morons. That's a real loss on my part. Of course, a drop in the ocean compared to the total losses, but the answer to your question is small investors, mutual funds, pension funds, the "little people" etc.
Whilst this may well have been true, if they can find more actionable acts by Lynch and co, they get to play liability top trumps: “I may have been stupid, but my stupidity wouldn’t have caught me out if it hadn’t been for those over-inflated statements you made.”
*If* Lynch is guilty, his downfall was seemingly to be too gung-ho with his pitch. If he’d referred all due diligence questions to Autonomy’s lawyers and auditors, would he still be in the dock?
The problem was that the company was pulling financial tricks to artificially inflate it's sales numbers.
They then told HP that their sales were real. That's the fraud.
The numbers were clearly "too good to be true", but HP didn't notice and/or didn't care.
HP was clearly an idiot, and clearly negligent in its responsibilities to it's shareholders.
However, it's also true that Autonomy was illegally cooking the books.
... the extent to which the judge agreed.
Extent which can most probably be measured in tens of millions.
So I'll ask again:
Who did all the cash blown away actually belong to?
ie: who were the parties that apparently lost the most money in this charade?
And while we're here ...
Just where is all the mohlah?
.
The money went from HP to the former owners of Autonomy.
Note that some of the former owners of Autonomy may not have known about the fraud.
The losers are HP shareholders. HP could have given those billions to shareholders via a dividend payment, but they chose to spend it on Autonomy instead.
The CEO took a punt on a shiny acquisition that he though would burnish the share price, the board went along with him, and the due diligence was dispensed with.
Turns out that they bought a pig in a poke - apart from Jack and his beanstalk that has never ended well for anyone.
Caveat emptor - why has this even got this far as a legal journey?
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