The U.K.’s Serious Fraud Office (SFO) has opened an investigation into Autonomy, the British data management firm that HP bought in 2011, much to its eventual regret. Autonomy’s accounting methods leading up to the sale are already being scrutinized by U.K. accountancy authorities — HP claims the firm inflated its figures ahead of the sale — but the involvement of the SFO is, as its name suggests, a much more serious matter.
The SFO investigation was revealed in a filing that HP lodged with the U.S. SEC on Monday:
“As a result of the findings of an ongoing investigation, HP has provided information to the U.K. Serious Fraud Office, the U.S. Department of Justice and the SEC related to the accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred prior to and in connection with HP’s acquisition of Autonomy. On November 21, 2012, representatives of the U.S. Department of Justice advised HP that they had opened an investigation relating to Autonomy. On February 6, 2013, representatives of the U.K. Serious Fraud Office advised HP that they had also opened an investigation relating to Autonomy. HP is cooperating with the three investigating agencies.”
This whole matter is strange. HP’s anger was sparked by having to take a $5 billion write-down on the Autonomy deal roughly a year after it took place, not long after poor initial results saw Autonomy chief Mike Lynch jump ship. Lynch has protested his and his team’s innocence ever since, even setting up a blog to put forward his case.
Just this month – so, after the SFO investigation was launched — Lynch was on stage at the London Web Summit repeating his assertion that HP has never fully explained what accounting improprieties the Autonomy team was supposed to have perpetrated.
In that interview, Lynch suggested that HP’s problem was in its lack of strategy. He said erstwhile HP CEO Leo Apotheker bought Autonomy because he had understood the value of data, but HP had switched back to its previous hardware focus after defenestrating Apotheker and bringing in Meg Whitman as CEO. He also hinted that he and the former management of Autonomy had had no choice about the sale, due to the premium HP was offering.