Autonomy did count some hardware sales as marketing costs, ex-finance bod tells High Court

HP bad, Deloitte and Lynch and Hussain good, says current Invoke Capital bod


Autonomy trial A witness who worked on the Autonomy finance team told London's High Court during the long-running Autonomy trial that the firm had indeed been accounting for some hardware sales as marketing expenses in its annual accounts.

Elizabeth "Lisa" Harris, who listed her business address as the same Cambridge office block that houses HQ Mike Lynch-owned infosec biz Darktrace, said in witness statements to the court that some hardware sales were being accounted for in marketing. Her assertion could be read as backing up one of HPE's claims against Lynch in the long-running Autonomy Trial.

In a November 2018 witness statement filed with the court, Harris said: "My understanding was that costs were allocated to sales and marketing for loss-making hardware because hardware was being used as a loss-leader in the US to put Autonomy and Autonomy's software in front of big-name US clients."

Back at the trial's opening in March 2019, HPE barrister Laurence Rabinowitz QC described these as "improper hardware sales" that were used to manipulate Autonomy's accounts into meeting the quarterly predictions of financial analysts – and keeping the firm's share price stable, thus making it a more attractive buyout target.

Harris also blamed HP M&A bod David Duckworth for grouping Autonomy's "hardware sales together with software licence sales in HP's finance system" in the immediate aftermath of the buyout. She continued: "When I questioned this he explained that HP thought that the distinction between hardware and software sales was not material and, according to Mr Duckworth, it was all 'product' from HP's perspective. This idea did not emanate from Autonomy and it was not hidden from HP."

Just to hammer the point home, she later said: "They [HP] were not interested in showing hardware separate from software. To HP, it was all product and HP's view was that it was not separate (such as services would be)."

Consistent with Lynch's earlier testimony in the case, Harris praised Deloitte's "robust" approach to auditing Autonomy's accounts.

Bigging up Deloitte for doing everything right and giving Autonomy's accounts an impeccable green light is one of the dominant themes in Lynch's legal defence.

Most of her witness statement was written in response to an HPE legal filing with the court, claimed to be a note made of a meeting Harris had with PwC investigators. She also said: "At no time did Mr Hussain want me to account for things in a way that was 'plainly wrong' as the note suggests," going on to assert: "I did not tell PwC that I was ever asked to lie to Deloitte, by Mr Hussain or anyone else. I did not lie to Deloitte and, so far as I know, no one at Autonomy ever lied to Deloitte."

Today the High Court will begin hearing oral closing arguments from Lynch's legal team, with Hussain's later in the week. The Autonomy trial is not yet done, however; the court is expected to reconvene in February or March to hear yet more evidence before the judgment is handed down, currently expected to be before May this year. ®

Similar topics


Other stories you might like

  • Prisons transcribe private phone calls with inmates using speech-to-text AI

    Plus: A drug designed by machine learning algorithms to treat liver disease reaches human clinical trials and more

    In brief Prisons around the US are installing AI speech-to-text models to automatically transcribe conversations with inmates during their phone calls.

    A series of contracts and emails from eight different states revealed how Verus, an AI application developed by LEO Technologies and based on a speech-to-text system offered by Amazon, was used to eavesdrop on prisoners’ phone calls.

    In a sales pitch, LEO’s CEO James Sexton told officials working for a jail in Cook County, Illinois, that one of its customers in Calhoun County, Alabama, uses the software to protect prisons from getting sued, according to an investigation by the Thomson Reuters Foundation.

    Continue reading
  • Battlefield 2042: Please don't be the death knell of the franchise, please don't be the death knell of the franchise

    Another terrible launch, but DICE is already working on improvements

    The RPG Greetings, traveller, and welcome back to The Register Plays Games, our monthly gaming column. Since the last edition on New World, we hit level cap and the "endgame". Around this time, item duping exploits became rife and every attempt Amazon Games made to fix it just broke something else. The post-level 60 "watermark" system for gear drops is also infuriating and tedious, but not something we were able to address in the column. So bear these things in mind if you were ever tempted. On that note, it's time to look at another newly released shit show – Battlefield 2042.

    I wanted to love Battlefield 2042, I really did. After the bum note of the first-person shooter (FPS) franchise's return to Second World War theatres with Battlefield V (2018), I stupidly assumed the next entry from EA-owned Swedish developer DICE would be a return to form. I was wrong.

    The multiplayer military FPS market is dominated by two forces: Activision's Call of Duty (COD) series and EA's Battlefield. Fans of each franchise are loyal to the point of zealotry with little crossover between player bases. Here's where I stand: COD jumped the shark with Modern Warfare 2 in 2009. It's flip-flopped from WW2 to present-day combat and back again, tried sci-fi, and even the Battle Royale trend with the free-to-play Call of Duty: Warzone (2020), which has been thoroughly ruined by hackers and developer inaction.

    Continue reading
  • American diplomats' iPhones reportedly compromised by NSO Group intrusion software

    Reuters claims nine State Department employees outside the US had their devices hacked

    The Apple iPhones of at least nine US State Department officials were compromised by an unidentified entity using NSO Group's Pegasus spyware, according to a report published Friday by Reuters.

    NSO Group in an email to The Register said it has blocked an unnamed customers' access to its system upon receiving an inquiry about the incident but has yet to confirm whether its software was involved.

    "Once the inquiry was received, and before any investigation under our compliance policy, we have decided to immediately terminate relevant customers’ access to the system, due to the severity of the allegations," an NSO spokesperson told The Register in an email. "To this point, we haven’t received any information nor the phone numbers, nor any indication that NSO’s tools were used in this case."

    Continue reading

Biting the hand that feeds IT © 1998–2021