Autonomy founder Mike Lynch sues HP for £100m after saying his name was blackened by allegations of fraud

Published: 14:36 EST, 1 October 2015 | Updated: 02:30 EST, 2 October 2015

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Dr Mike Lynch is suing Hewlett Packard for more than £100million after saying his name was blackened by allegations of fraud.

The founder of technology firm Autonomy launched a claim in the UK High Court on Thursday.

He said he wanted HP boss Meg Whitman to account for ‘the damage that’s been done by making these statements that she knew weren’t true’ about him.

Dr Mike Lynch (pictured) is suing Hewlett Packard for more than £100million after saying his name was blackened by allegations of fraud

His case – the latest twist in a three-year saga – comes several months after HP sued Lynch and former Autonomy finance chief Sushovan Hussain, alleging they masterminded a £3billion fraud while at the software maker.

HP paid £7.1billion to buy Autonomy in 2011, but within a year wrote down £5billion from its value and claimed it had discovered a massive accounting scandal.

Lynch has always denied the accusations, and says that the epic destruction of value came from HP’s mismanagement of the company, as well as unrealistic integration savings.

This meant the deal was ‘doomed from the very beginning,’ he said on Thursday.

Court documents filed yesterday say that parts of HP refused to work with Autonomy shortly after the deal, and that the computer-maker was ‘in chaos’.

The documents state integration was ‘delayed due to political infighting within HP’, and that the business was ‘not given the support it needed to thrive…in some cases its efforts were undermined by other divisions within HP’.

It also makes the claim that HP salesmen were incentivised to ‘market and sell competing third-party software products rather than Autonomy software’.

HP paid £7.1billion to buy Autonomy in 2011, but within a year wrote down £5billion from its value and claimed it had discovered a massive accounting scandal

Much of Autonomy’s top team left within six months of the acquisition.

HP said that Autonomy had disguised its growth rate by refusing to disclose hardware sales, and by using complicated accounting techniques to book revenues early.

But the due diligence report by KPMG ahead of the deal, which came to light last month, identified both of these as key parts of Autonomy’s practices.

Lynch yesterday said: ‘Over the past three years HP has made many statements that were highly damaging to me and misleading to the stock market. Worse – HP knew, or should have known, these statements were false.’ He added: ‘HP wasn’t misled by us or anyone else – evidence will show they didn’t even read their own due diligence report.’

At the time of the deal, HP gave Autonomy a potential value of £11.9billion – compared to its market value of £4.2billion on the London Stock Exchange at the time.

According to court documents, HP’s finance boss Cathie Lesjak warned the company’s board that ‘HP would be unable to capture the optimistic synergies on which its valuation of Autonomy’.

A spokesman for HP said: ‘Mike Lynch’s lawsuit is a laughable and desperate attempt to divert attention from the $5bn [£3bn] lawsuit HP has filed and the ongoing criminal investigation.

‘HP anxiously looks forward to the day Lynch and Hussain will be forced to answer for their actions in court.’

MEG'S LESSONS WITH ROOTIN' TOOTIN' COUNTRY CLASSICS

HP boss Meg Whitman (pictured) played the company’s executive committee songs before holding open discussions about how to ‘apply the meaning… to their own management methods.

HP directors had to listen to country music during board meetings to help them become better leaders, according to extraordinary allegations buried within court documents.

The computer-maker’s boss Meg Whitman, played the company’s executive committee songs before holding open discussions about how to ‘apply the meaning… to their own management methods’.

Mike Lynch, who briefly sat on the executive board, recalls the details in a lawsuit where he claims damages over fraud allegations that he says are groundless.

Court documents state that Whitman ‘repeatedly adopted the management approach of . . . playing country music to the meeting, instructing the senior executives attending to take the meaning of the country music songs and apply them to their own management methods’.

Lynch said: ‘I don’t even like country music.’ Kenny Rogers was a favourite of Whitman, he added.

The country legend’s most famous song – The Gambler – includes the lyrics: ‘Know when to walk away, and know when to run.’

Lynch left HP within six months of Autonomy being acquired.

Whitman is a known fan of the genre, once saying she never travels without a country music playlist on her mobile phone. She previously said that she uses it to ‘tune out the noise and help me concentrate while travelling’ – and has previously admitted to playing it while in her office during the working day.

On LinkedIn she names George Strait, Brooks & Dunn and Shania Twain as favourite artists. Whitman’s other hobbies include horse-riding.

Other behaviour included Whitman reading extracts from staff emails praising herself. ‘We were always thinking they came from someone in the PR department,’ Lynch added.

Before joining HP, Whitman ran for governor of California for the Republican Party, hoping to take over from Arnold Schwarzenegger.

Lynch said he assumed everyone in the room was a Republican during meetings, and that she ‘didn’t realise we don’t really have them over here in the UK’.