Former Director Says HP is Trying To Shift Blame for Disastrous Deal

[Anonymous]

Former Director  Says HP is Trying To Shift Blame for Disastrous Deal
Sushovan Hussain – accused of fraud by Hewlett-Packard – uses a court filing to accuse HP of making unsubstantiated allegations of fraud
By Juliette Garside

Autonomy's former finance director has accused Hewlett-Packard of making unsubstantiated allegations of fraud to cover its own blunder in paying $11bn to buy the British software firm three years ago.

Sushovan Hussain, who along with Autonomy's founder Mike Lynch has been accused of fraud by HP, oversaw the sale of his firm for 11 times its $931m revenues in August 2011. A year later, HP wrote down the value of Autonomy by $9.9bn, $5bn of which it attributed to alleged accounting improprieties at the British group.

In his filing, Hussain claimed, citing a Bloomberg article of November 2012: "'The real story here is that HP grossly overpaid – again – for an acquisition … In other words: HP was the sucker. Now it's trying to shift the blame elsewhere.'"

The architect of the deal, HP chief executive Léo Apotheker, lost his job after just 11 months amid a storm of criticism from shareholders. He was succeeded by Meg Whitman, the former eBay boss, who approved the acquisition in her previous role as a non-executive director of HP. Hussain's filing claimed: "HP mismanaged the Autonomy merger, then shifted blame for the resulting write-down by characterizing accounting disputes as 'fraud'. This corrupt settlement is part of a larger effort by HP to cover up both its mismanagement of the Autonomy integration and its ploy to falsely accuse others. By his motion, Mr. Hussain seeks to shine a light on what HP wants to keep in the dark."

Hewlett-Packard said in response: "The bottom line is that Sushovan Hussain's interests and those of HP and our shareholders are diametrically opposed. It's preposterous for him to complain about HP and our shareholders joining forces and holding him accountable for the massive fraud that both believe he perpetrated upon the company. If Hussain is truly interested in clearing his name, he should welcome the coming suit."

Lawyers for Hussain have intervened to prevent a settlement between law firms representing certain HP shareholders, and the company itself. The shareholders were seeking compensation from HP after accusing the company of wasting cash on the botched acquisition.

A judge in the district court of Northern California is due to ratify the settlement on 25 August. Hussain has accused the law firms concerned, Cotchett, Pitre & McCarthy, and Robbins Geller Rudman & Dowd, of "collusion" with HP, alleging the company has bought them off by promising to pay the lawyers a guaranteed $18m to help it pursue legal action against Hussain, Lynch and potentially other members of Autonomy's former management. They can share in potential financial winnings from that action, but the amount is capped at $30m.

But Hussain claims the US group does not want to defend its claims in front of a jury. He argues HP is hoping the case will never reach a court, because the company has no solid proof to support allegations of fraud. His lawyers are demanding access to the HP case files so that they can see the evidence.

"HP's opposition swells with bile, but its sound and fury signify nothing," Hussain's filing stated. "Without any support at all, HP calls Mr Hussain 'a fraudster', which he is not."

In a statement, Lynch said: "Evidence has shown the accusations HP made in November 2012 are wrong. Was this negligence or was it worse? It's time for Meg Whitman to answer."

• This article was amended on 12 August

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August 12, 2014 at 12:53 PM