UK’s SFO Closes Probe into Autonomy Sale

The UK’s Serious Fraud Office (SFO) has closed its criminal investigation into the controversial
sale of Autonomy to Hewlett-Packard
, although the US Department of Justice (DoJ) will continue its review of the deal between the two software groups.

The move comes almost a year after the SFO opened an investigation into the 2011 deal after receiving a complaint from HP. The £7bn transaction has triggered lawsuits and investigations ever since HP issued a US$8.8bn (£5.8bn) profits warning in November 2012, which it blamed principally on “serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy”.

The US group alleged that “some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures” to inflate the company’s value by more than US$5bn.

In its statement, the SFO said that having reviewed evidence it had concluded: “In respect of some aspects of the allegations . . . there is insufficient evidence for a realistic prosecution.”

However, the agency added: “In respect of other aspects . . . jurisdiction over the investigation has been ceded to the US authorities whose investigation is ongoing.” Both the DoJ and the Securities and Exchange Commission (SEC) are pursuing parallel investigations.

Autonomy’s founder, Mike Lynch, who led the sale to HP, welcomed the move by the SFO to in effect reject some of the allegations made by the US company. “As we have always said, HP’s allegations are false, and we are glad that after a two-year review of the material presented by HP, the SFO has concluded that there is not a case to pursue.” he commented

“Let’s remember, HP made allegations of a US$5bn fraud, and presented the case in public as a slam dunk. HP now faces serious questions of its own about its conduct in this case and the false statements it has made.”

However, Lynch did not comment on the SFO’s comment that not all allegations had been exhausted. HP responded by reconfirming its determination to also pursue its allegations through the civil courts.

“As the SFO made clear, the US authorities are continuing their investigation and we continue to cooperate with that investigation,” said a spokesperson. “HP remains committed to holding the architects of the [alleged] Autonomy fraud accountable.”

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