Hewlett-Packard’s claim that it was duped into grossly paying too much when it bought British software company Autonomy in 2011 is supported by newly released documents from Air Force investigators.
HP has claimed it paid $11 billion for Autonomy, and later had to write off $8.8 billion of that purchase, because Autonomy officials deceived HP by inflating Autonomy’s value.
In investigating two companies doing business with Autonomy – at least one of which is a government contractor – the Air Force came to the same conclusion, according to document disclosed Friday by the Washington Post and obtained Monday by this newspaper.
“From 2007-2011,” the document said, “former Autonomy senior management engaged in numerous accounting and sales practices designed to deceive analysts, investors and potential purchasers into believing that Autonomy could, and would continue to, generate margins and revenues that it could not ultimately sustain due to such practices.”
The information came from HP’s “internal investigation” of the Autonomy deal, according to the document. Because of HP’s allegations, Autonomy is being investigated by the United Kingdom Serious Fraud Office, U.S. Department of Justice and U.S. Securities and Exchange Commission.
Michael Lynch, Autonomy’s former chief executive, denied wrongdoing in a statement posted on his website.
“We strongly reject HP’s allegations,” it said. “The few examples seen to date in support of its allegations, such as those cited in the USAF letter, show that HP appears to have had a fundamental misunderstanding of (International Finance Reporting Standards) accounting practices, and we vehemently deny anything improper.