Lynch was 'willing to lie' to High Court over Autonomy whistleblower, claims HPE

Plus: Meg Whitman and Co had 'buyer's remorse' over $11bn purchase

Autonomy Trial Mike Lynch was "thoroughly unreliable" and "willing to lie" to the High Court about the $11bn purchase of Autonomy by Hewlett Packard, according to HPE's lawyers in court yesterday.

Starting the marathon closing arguments in Britain's biggest fraud trial, Laurence Rabinowitz QC spared nobody's blushes as he charged straight into a character assassination of Lynch, repeatedly saying the former Autonomy CEO had lied to trial judge Mr Justice Hildyard.

I just got here - what's it all about?

In 2011, HP bought Autonomy, a maker of software to keep track of unstructured data, founded by Mike Lynch in the UK â€" for $11bn.

After the buyout, the US IT titan wrote down the value of Autonomy by $8.8bn, claiming the British firm had "misrepresented" its value. Lynch, Autonomy CEO at the time of the biz gobble, denies this.

HPE is now suing Lynch and Autonomy financial chief Sushovan Hussain at the High Court in London, seeking $5bn in damages. Over in the States, prosecutors are pursuing a separate criminal fraud case against Lynch and Autonomy bean-counter Stephen Chamberlain. All three men deny any wrongdoing.

You can find The Reg's comprehensive coverage of the trial here.

Unusually, Rabinowitz also tried to impress the judge by referring to the ongoing US criminal and extradition proceedings against Lynch. This line of argument appeared to go down with his lordship like a lead zeppelin, judging by his reply to it.

Exhorting the judge to ignore Lynch's submission that HPE's entire case against him was a "manufactured claim", Rabinowitz said that was "not the impression that the US criminal authorities have got."

The US habit of doing attention-grabbing legal things while the British case progresses has been a sore point throughout the Autonomy Trial, though only ever hinted at in the courtroom. Having that brought up as a reason to side with HPE made little headway with the judge.

"If it's something which, were I to say, 'and actually I'm comforted in all this by the fact that the criminal authorities in the US thought fit to indict, and now to seek to extradite Dr Lynch and they found Mr Hussain guilty and that has weighed with me', if you think that the Court of Appeal would be content with that, well and good," said Mr Justice Hildyard to HPE's barrister.

The reference to the Court of Appeal couldn't have been clearer: the judge was saying, do you think "well, everyone else says he's guilty so I'd better fall into line" in a judgment would survive serious scrutiny?

HPE: Here's why we say Lynch lied

Later on Rabinowitz referred to an Autonomy whistleblower, former US CFO Brent Hogenson, who, HPE alleges, emailed and phoned Lynch to warn him that all was not well with the company's accounts. HPE says Lynch sidelined Hogenson and ignored the man's warnings because he knew full well the accounts weren't right – and now seeks to use Lynch's version of events as proof the former CEO is lying about what truly happened.

During his month-long cross-examination, Lynch claimed Hogenson was trying to blackmail Autonomy for an exit payoff and his purported whistleblowing was part of that. Despite that claim, Lynch accepted in court that private investigation firm Kroll had failed to find any evidence that Hogenson was engaged in a payroll fraud, as Lynch had claimed at the time.

Rabinowitz, speaking in court yesterday, described the Hogenson episode as demonstrating that Lynch is a "liar and unreliable witness," saying: "What you do not do, which is what Dr Lynch did, is to sideline Mr Hogenson, to undermine him, to make false accusations against him and indeed before your lordship to suggest that what was motivating Mr Hogenson was the payroll fraud which had occurred in San Francisco at a time before he was even there."

Warming to his theme, HPE's lead barrister continued: "Why not just investigate this properly? Why not speak to Mr [former US sales person Christopher] Egan? Why not gather the information... why would you not just lift up the carpets and make sure there was nothing in this at all?"

Mr Justice Hildyard could think of one reason, which he put straight to HPE's barrister: "My understanding of what Dr Lynch says he did was to refer all this matter to the [internal Autonomy] audit committee and to [company auditors] Deloitte and himself refrain from making his own enquiries, lest that would, in some sense, pollute or undermine the enquiries which he had caused to be made by those persons. Is that indicative of dishonesty?"

After Rabinowitz demurred, Hildyard pressed the point: "You can't just say because he didn't himself make enquiries, he's in some way dishonest, can you?"

Rabinowitz highlighted passages from his mammoth 2,000-page written closing argument in which HPE's legal team says Hogenson was prevented from effectively raising his concerns with auditors, saying Lynch not only didn't personally investigate but also ensured those who did look into Hogenson's claims were steered away from getting the full picture.

All of the next judicial week will be spent on hearing HPE's closing arguments. In January the trial will reconvene to hear Lynch and Hussain's closing arguments, while the court will be reassembled again in February or March so the judge can ask the lawyers further questions. Judgment is expected by May. The Autonomy Trial continues. ®

Bootnote

Mr Justice Hildyard also summarised the entire case rather neatly while engaged in one of his back-and-forth exchanges with Rabinowitz.

They say that you had buyer's remorse and Hewlett-Packard, in the light of that remorse, scratched around for reasons to justify its rather immediate writing-off of a large part of the purchase price. That's what they say. You say they're wrong about that and they say they're right about that.