HPE wants to get Autonomy billions from Mike Lynch's estate
The fraudulent sale of the software company Autonomy to Hewlett-Packard haunts the company founder to his grave. It is "only" a matter of 4 billion dollars.
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Hewlett Packard Enterprise has no intention of waiving billions in damages just because its main creditor, Mike Lynch, drowned in the Tyrrhenian Sea. The company has confirmed this to Reuters. The claim is now to be pursued against the estate. Lynch was co-founder and CEO of the British software company Autonomy, which was acquired by Hewlett-Packard in 2012. HP paid around 11.7 billion US dollars for the company, whose specialty was software for processing unstructured data. After the takeover, it emerged that Autonomy had been fudging its turnover and profit figures for years.
As a result, a civil lawsuit for damages against ex-CEO Lynch and ex-Chief Financial Officer Sushovan Hussain has been running in England for years. Hewlett-Packard has since split into HP and HPE (Hewlett Packard Enterprise), with both appearing as plaintiffs together with the legal remnants of Autonomy. Criminal investigations in the UK were dropped, but Hussain was sentenced to five years in prison for fraud in the USA in 2019(USA v Sushovan Tareque Hussain, US Federal District Court for Northern California, case no. 16-cr-00462; upheld in 2020 by the US Court of Appeals for the Ninth Circuit, case no. 19-10168). Hussain was therefore unable to attend the civil trial in London.
The plaintiffs originally demanded more than five billion dollars from the two men. What followed was one of the most complex trials in English court history, with Lynch's cross-examination alone lasting 20 trial days. He tried in vain to shift responsibility for the false business figures away from himself and onto his former CFO. In 2022, after 93 trial days, the English judge found in favor of HP on five of the six fraud charges; the judge twice pointed out that he considered the sum demanded by HP to be excessive. Considerably less was appropriate.
In 2023, the UK extradited Lynch to the USA, where he was brought to trial. In the English civil proceedings, HP reduced the claim against the fraudulent managers to "only" four billion dollars. It is not yet clear whether a reduction of 20 percent is "significantly less" in the court's opinion.
Celebration after acquittal leads to ruin
In June, the US criminal trial for fraud in HP's billion-dollar deal ended with an acquittal for Lynch.(USA v Michael Richard Lynch, US Federal District Court for Northern California, Case No. 18-cr-00577). He was allowed to leave the country again. In mid-August, the Brit celebrated his acquittal with lawyers and business associates on his superyacht Bayesian. On the night of August 19, an unexpectedly violent storm hit and the ship, which was anchored off Sicily, suddenly sank. 15 of the 22 people on board were able to save themselves, including Lynch's wife. Unfortunately, seven people could only be rescued dead: the cook, one of Lynch's lawyers, his wife, Morgan Stanley Chairman Jonathan Bloomer (once Chairman of Autonomy), his wife, Mike Lynch and one of his two daughters.
Lynch is said to have been very rich, but his estate is unlikely to be worth four billion dollars. This makes insolvency of the estate, which includes both assets and debts of the deceased, likely. In addition to HPE, HP is also likely to continue to pursue the claim. The management is obliged to do so as long as the respective shareholders do not decide otherwise.
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