Mike Lynch loses $5bn fraud case over sale of Autonomy to HP in 2011

UK entrepreneur Mike Lynch has lost a multi-billion pound fraud action brought over the sale of software company Autonomy to Hewlett-Packard (HP) in 2011.

The High Court judge found that HP had “substantially” succeeded in its bitter civil case but indicated that the US firm would get considerably less than the $5bn (£3.7bn) it had sought in damages.

The summary ruling by Mr Justice Hildyard follows years of bitter wrangling over Autonomy’s value, which HP marked down by almost $9bn after buying the firm for $11bn (£8.4bn).

It claimed it had been hoodwinked over Autonomy’s true financial performance and prospects when going over its accounts in advance of the takeover.

Autonomy founder Dr Lynch, who made an estimated $800m from the deal, has always denied any wrongdoing and argued he was being made a “scapegoat” for mismanagement by HP.

But the judge found Autonomy had concealed the sales of hardware products and engaged in convoluted reselling schemes to mask a shortfall in its key software products.

His lawyers indicated he planned to appeal though a further blow could come Dr Lynch’s way later on Friday.

He is also due to learn whether Home Secretary Priti Patel has approved an extradition request to the US where he faces criminal charges, including wire fraud and securities fraud, relating to the deal.

His Autonomy colleague, former chief financial officer Sushovan Hussain, was convicted in the US in 2019 and jailed for five years. He has subsequently lost an appeal against that conviction.

US authorities claim that Dr Lynch, who denies all charges against him, deliberately overstated the value of his business, which specialised in software to sort through large data sets.

Dr Lynch has opposed extradition on the grounds that the alleged criminal offences should come under the jurisdiction of the UK and not the US. He is expected to appeal any decision by Ms Patel which allows the US request.

His High Court legal team was yet to comment on the summary judgment.

He had launched a counter-claim for at least £95m in damages against HP for “a series of false, misleading and unfair public statements” about his alleged responsibility for supposed accounting irregularities and misrepresentations at Autonomy.

An HP spokesperson said of the findings: “Dr Lynch and Mr Hussain defrauded and deliberately misled the market and Hewlett-Packard.

“HP is pleased that the judge has held them accountable.”

Kelwin Nicholls, of law firm Clifford Chance who represented the tycoon in the case, said: “Today’s outcome is disappointing and Dr Lynch intends to appeal.

“We will study the full judgment over the coming weeks”.