U.K. Fraud Office Ends HP Autonomy Investigation, but Investigation Continues in U.S.

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January 19, 2014 – Bloomberg News reports that the United Kingdom’s Serious Fraud Office (SFO) has ended its investigation of Hewlett-Packard’s $10 billion takeover over Autonomy Corporation..

The SFO ended its investigation after finding “insufficient evidence for a realistic prospect of conviction.” However, the U.S. Department of Justice is still investigating the deal, and the SFO has given its files to the U.S. authorities.

HP alleged that before it agreed to buy Autonomy in 2011, the Cambridge, England-based software company gave an overly optimistic picture of its financial health. The next year, HP wrote down $8.8 billion connected to the acquisition, and said more than $5 billion was the result of accounting improprieties by Autonomy. After the writedown, in November 2012, HP accused Autonomy’s former management team of “accounting improprieties, misrepresentations, and disclosure failures.”

The “allegations are false, and we are pleased that after a two-year review of the material presented by Hewlett-Packard, the SFO has concluded that,” stated Autonomy Chief Executive Officer Mike Lynch said in an e-mailed statement. HP “made allegations of a $5 billion dollar fraud, and presented the case in public as a slam dunk.”

In a statement, HP representatives said that HP “remains committed to holding the architects of the Autonomy fraud accountable. As the SFO made clear, the U.S. authorities are continuing their investigation and we continue to cooperate with that investigation.”

The SFO began investigating HP’s complaint in March 2013, but Bloomberg News notes that it never interviewed Lynch or Autonomy’s former chief financial officer, Sushovan Hussain, according to a person with knowledge of the investigation, who asked not to be identified because the matter is confidential.

However, an SFO spokesperson said Lynch and Hussain “were invited to attend an interview, but their legal representatives communicated with us on their behalf.”

Bloomberg News also reports that the U.K. Financial Reporting Council is still investigating the matter.

In the United States, HP is also trying to settle a shareholder lawsuit related to the writedown.

More Resources:

August 2014: HP ACCUSES AUTONOMY FOUNDER MICHAEL LYNCH OF FRAUD, FILES LAWSUIT

May 2013: HEWLETT-PACKARD FACES $1 BILLION LAWSUIT FROM SHAREHOLDERS OVER AUTONOMY DEAL

January 2013: HP ISSUES STATEMENT ON RECENT 10-K FILING AND AUTONOMY

November 2012: HP-AUTONOMY WAR OF WORDS CONTINUES WITH NEW HP STATEMENT

November 2012: HP CHARGES AUTONOMY MANAGEMENT WILLFULLY MISLED POTENTIAL BUYERS, FALSELY INFLATED VALUE OF AUTONOMY

October 2011: HP COMPLETES ACQUISITION OF AUTONOMY, WILL BOOST ENTERPRISE SOFTWARE, CLOUD OFFERINGS

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