Mike Lynch, former boss of Autonomy, said he can’t see how accusations leveled by Hewlett-Packard of dubious accounting add up to a $5 billion write-down on the software business he sold them last year.
HP said on Nov. 20 it would write $8.8 billion off its $11.1 billion purchase of the British company, $5 billion of it due to “serious accounting improprieties” and “a wilful effort by Autonomy to mislead shareholders” revealed by a whistleblower and a forensic audit by accountants PricewaterhouseCoopers.
It has alerted regulators on both sides of the Atlantic.
Mike Lynch says he has yet to hire a lawyer and has not spoken to either HP or any investigators, but he has sat down with past accounts of the firm he founded in an attempt to answer the accusations laid out in HP’s public statements.
HP’s general counsel, John Schultz, claimed Autonomy created more than $200 million in revenue over a two-year period from 2009, which would amount to 12.5 percent of Autonomy’s $1.6 billion in revenues in its annual accounts for 2009 and 2010.
While denying the allegations as “utterly wrong,” Lynch said there were three areas where accounting rules gave scope for differences of interpretation.
Accounting rule-setters have been working on plans for a decade for common global standards so regulators and investors can compare company accounts.