The UK's largest civil fraud trial has begun with US technology giant Hewlett-Packard suing the former head of software firm Autonomy.
The civil case, which is expected to run for nine months, relates to the £8.4 billion sale of Autonomy to Hewlett-Packard (HP) eight years ago. HP is suing Autonomy founder Mike Lynch and former Autonomy chief financial officer Sushovan Hussain for £3.9 billion, claiming they artificially inflated the company's revenues and earnings between 2009 and 2011 so that HP would overpay for the firm.
Mr Lynch has argued that HP is trying to cover up its own mismanagement of Autonomy after the 2011 sale and has stated his refusal to be a scapegoat for the failings of others. His lawyers have put the dispute down to a dispute over differences between UK and US accounting systems.
Mr Lynch also faces criminal charges in the United States. A 17-count indictment has been filed with the federal court in San Francisco. He also denies these allegations, which he has called "baseless''.
Autonomy has been a success story. Founded by Mr Lynch, a Cambridge graduate, in 1996 it developed software that could extract information from sources such as phone calls, emails or video.
It became one of the top 100 UK public companies and led to Mr Lynch gaining an OBE for services to enterprise. Before it was bought by Hewlett-Packard, it had headquarters in San Francisco and Cambridge with two thirds of its revenue coming from the US.
While the test to show fraud is extremely high there is no doubt this claim will be of interest to both the US Department of Justice and the UK's Serious Fraud Office if there are allegations of financial irregularities. A key focus could be examining audit evidence and what adjustments were made therein.
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