Ex-Autonomy CFO: HP Trying To Hide Truth 59
jfruh (300774) writes The fallout from HP's Autonomy acquisition keeps getting more dramatic. Autonomy's ex-CFO is trying to block the settlement of lawsuits that arsoe the botched deal, claiming that HP is trying to hide its "own destruction of Autonomy's success after the acquisition." HP hit back, saying the ex-CFO "was one of the chief architects of the massive fraud on HP that precipitated this litigation."
Two things I'm certain of... (Score:5, Insightful)
There are two things I'm certain of in no particular order:
1. HP are wildly incompetent.
2. Autonomy management (especially Lynch) are a bunch of crooks.
I do actually know people who have had dealings with Lynch.
I miss groklaw (Score:5, Insightful)
Is the CEO really trying to argue.. (Score:5, Insightful)
There's a line in the IT World article that really stands out at me, which is:
"Autonomy founder and CEO Mike Lynch, who was ousted from HP in 2012, has denied any wrongdoing, saying publicly that HP was aware of Autonomy's accounting practices..."
So in this case, Autonomy is making the case that they were cooking their books, but committing accounting fraud is perfectly okay because HP should've known about it... or am I missing something here?
Re:Is the CEO really trying to argue.. (Score:5, Insightful)
...and he's also apparently arguing that, knowing Autonomy is cooking the books, and about to implode, HP thought it would be a great idea to buy them.
Whatever one can say about the competence of HP's board, nobody could seriously claim they'd buy a company if they knew that was going on.
Re:What is "Arsoe" (in the first sentence) suppose (Score:4, Insightful)
I think it is intended to be "arose from"
probably not (Score:5, Insightful)
There's a line in the IT World article that really stands out at me, which is:
"Autonomy founder and CEO Mike Lynch, who was ousted from HP in 2012, has denied any wrongdoing, saying publicly that HP was aware of Autonomy's accounting practices..."
So in this case, Autonomy is making the case that they were cooking their books, but committing accounting fraud is perfectly okay because HP should've known about it... or am I missing something here?
Probably not.
I did my MBA in Entrepreneurship (yeah, I KNOW! Spare me!) and we spent quite a bit of time on financial due diligence. Some of the case studies - things that happened in real life - were just pathetic.
Remember kids, all the bullshit that businesses pull on us consumers, they do to each other ten fold and justify by saying "you should have known better".
Then if it's worth it, sue.
This is really egg on HP's face (Score:5, Insightful)
HP is a multi-billion dollar corporation. In other words, they get to wear the big boy pants. Due diligence is part of the acquisition process and it's a breach of the HP board's fiduciary responsibility to the shareholders to have gotten rooked so badly. I know people who worked at Autonomy prior to the acquisition and there were plenty of rumors going around about Autonomy's accounting shenanigans.
Lynch and Hussain may very well have committed fraud on HP. However, getting taken for $8B brings to mind the old saying about a fool and his money.
Re:This is really egg on HP's face (Score:5, Insightful)
And these (some of them at least) are the same folks who signed off on the mark-to-market figures and related matters for Goldman Sachs, BofA and the rest of the folks who caused our financial system to collapse in 2007-2008.
See a pattern?
Re:This is really egg on HP's face (Score:5, Insightful)
If your accounting is violating all the rules it's possible to hide the real accounting information from everyone. Look at what Enron did with layers of fake companies that weren't on the books holding all the bad debt. When you go to that level of fraud the only people that are going to be able to unravel it are forensic accountants and months of fine toothed combs. The system is gameable because it operates on a system of trust, when these CEO's and accountants are willing to go to the level of full on accounting fraud the system we have doesn't work because it always assumed we had rational players that aren't two bit scammers. The degrading of ethics in business school has apparently turned that on it ear.
Maybe the answer is for these accounting firms to hire real forensic accountants to analyze companies. But if we've reached that point it's even scarier than you can imagine. What I think we need to do is be putting these CEO's and CFO's in jail, for 15-30 years and assigning high enough criminal penalties and restitution to ensure they are broke when they get out. Sarbanes-Oxley gave them the teeth to make that happen, the problem is right now Crime pays. The justice department should be investigating everyone involved.
Re:Is the CEO really trying to argue.. (Score:4, Insightful)
Non-publicly traded companies have some leeway with how they do their accounting. This is especially important for startups which may not have a relevant example to fall back on. Just because their accounting didn't meet HP's standards does not mean they were "cooking the books".
Re:Two things I'm certain of... (Score:4, Insightful)
you missed out the bit where HP wanted the Automony enterprise search stuff so badly, they just didn't bother working out how much the rest of the business was actually worth and made them a stupid (by Autonomy standards) but ordinary (by Silicon Valley takeover standards) offer.
Mind, with WhatsApp being bought for $16bn, and only bringing a free> product to the table, you'd think the Autonomy deal was the paragon of financial prudence. that HP turned it into the equivalent of a free app is down to the competence of HP's management.
Oh yeah, you already covered that. Was worth repeating though.
Re:Is the CEO really trying to argue.. (Score:4, Insightful)
depends. Did they get a bonus for getting the takeover through?
Takeovers tend to be very popular for just that reason.