HP-Autonomy: Attorneys wrap up arguments in Mike Lynch's stateside criminal fraud trial Closing arguments were delivered today in Mike Lynch's criminal fraud trial in San Francisco, over a decade after the HP/Autonomy merger that provoked the whole kerfuffle. Federal prosecutors accuse Lynch and his co-defendant Stephen Chamberlain of defrauding American computer giant HP when it bought his software business …
Exactly so. Much smaller transactions involve armies of lawyers and accountants to turn over every rock. It is simply not possible if they'd done a proper job they would not have uncovered "every accounting trick in the book". In fact - what a dead giveaway. If those were indeed the known accounting tricks those are exactly what the due diligence team would have been looking for.
Why? In all probability, Lynch is guilty. Though of course the courts have still to decide.
Autonomy's CFO grassed him up. That CFO was tried, found guilty and went to jail. It's hard to believe a CEO could be unaware their company had committed fraud. Or that the CFO done that all by themself without anyone else in the business knowing about it. Anyone remember Enron? Or Worldcom?
HP may well have been stupid/gullible/negligent by overpaying for Autonomy. But that's a different bunch of court cases from the one(s) about who is responsible for cooking Autonomy's books.
This trial is one where you wish both sides lose.
If Lynch is convicted, you could say that both sides did lose. HP lost a lot of money, and Autonomy folks went to/will go to jail.
I do understand the "what-about-ism" prevalent in many comments here (i.e., "HP should have known better"). But as is routinely pointed out for smaller-scale cons, you can't use the fact that your victim was utterly foolish as a valid defense in court. (On El Reg fora, it may be a different matter.)
"HP may well have been stupid/gullible/negligent by overpaying for Autonomy. But that's a different bunch of court cases from the one(s) about who is responsible for cooking Autonomy's books."
Oh yes, absolutely that. How can something by bought for $11B and then have a loss "written down" against it of $9B? That is either some incredibly huge fraud, some incredibly huge post-sale mismanagement or a massive fraud by HP in the aftermath. I'm sure the HP(E|Inc) shareholders will have something to say if they haven't already.
It is, but by getting Lynch convicted they get to blame someone else for their failure to perform due diligence, and I suspect their auditors will be happy to lend a hand because they got exposed for not doing their job.
It's not an either/or issue: HP's auditors screwed up massively by not picking up on Lynch's apparent creativity despite that being their actual job, and Lynch was a tad more creative than the laws allow for. Both can exist at the same time in the same universe.
That HP discovered this retrospectively does not undo the fact that they screwed up on the actual evaluation (and on pricing this beast way over market value to start with), but the hope is that by getting Lynch, err, lynched everyone will look that way instead of theirs.
This is corporate America, folks. If something makes a lot of noise, start looking for what they're trying to distract you from. Also applies to most of the Musk noise - you've seen that demonstrated at their earnings call where "we didn't hit our numbers by a rather embarrassingly wide margin" was shoved aside by talking about yet a new pipe dream that will never be delivered, but investors fell for it. Again.
I was working as a sales grunt at HP at the time they bought Autonomy. Every week there'd be a new hot product or service we'd be told to phone customers about.
All the sales "leaders" had a semi for Autonomy and had mainlined the Kool-Aid. I think we all downloaded some crappy app which was very poor augmented reality featuring Mike Lynch and a Minion*. And it was also all about unstructured big data.
It was utter nonsense and HP were panicking they were being left behind by other vendors. It's completely believable that the Board decided to buy a software company, any software company, as a reaction.
*One of the cartoon yellow ones, not Leo Apotheker.
It was, and HP types did get made to look very silly. However, an accounting con is still an accounting con, if it is found to have been that.
There are things from this that read across to other tech areas. My favourite one is self driving cars. Musk is not the only one talking up their tech, there's plenty of start ups that got started up specifically to look good on paper and in crude demos and get bought out for big bucks by one of the big companies.
Autonomy basically made the mistake of saying that they had any sales at all. Probably didn't need to do that, could have got the same takeover price.
Me personal opinion about that affaire, its a power vacuum in high direction managerial on venerable californian HP company, firts decade XXI century, I believe ex ATT C Fiorinna, ex NCR Mark Hurd and ex IBM Apotheker, all 3 CEOs dont focus in make HP in a moore competiviness about IBM, Dell etc, instead the firts objetive of them is to do a big one company.
Vision from Apotheker was créate HP a oriented software company ( erroneus, all HP vocation hystory its engineering great hardware. ).That strategy unchained, (I believed ) a one harry up decision to purchase BRITISH Autonomy.
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