Department of Justice opens investigation of the HP and Autonomy acquisition

Brittany A. Roston - Dec 28, 2012
Department of Justice opens investigation of the HP and Autonomy acquisition

HP acquired Autonomy for $11.1 billion, only to take an $8.8 billion writedown due to alleged fraud on Autonomy’s part. HP states that Autonomy is guilty of “serious accounting improprieties,” and that it fraudulently inflated its apparent worth to make HP bid accordingly. Now the U.S. Department of Justice has gotten involved, opening an investigation in the matter.

The issue picked up speed fast, with HP getting slapped by a lawsuit via its shareholders. Both the auditing firms – Deloitte and KPMG – were listed as defendants for failing to notice red flags hinting at Autonomy’s skewed accounting. Also listed was HP’s executives, officers, and board of directors for negligence and breach of duty.

Rumors that Autonomy was up to no good were circling before HP acquired the company, and according to inside sources, HP wanted out of the deal. The company failed to find any evidence of fraud on Autonomy’s part, however, giving it no legitimate excuse to back out. HP is said to have been aware of the allegations about Autonomy’s “creative accounting” methods.

As for the DOJ investigation, HP both confirmed it and stated that it would fully cooperate. Meanwhile, Autonomy’s founder Mike Lynch has created a website where he counters HP’s claims, stating that HP has failed to substantiate its allegations, among other things. Lynch has also stated that Autonomy would cooperate with the Justice Department’s investigation.

[via ZDnet]

Must Read Bits & Bytes