US prosecutors had accused Lynch of masterminding a criminal scheme to defraud investors by artificially boosting Autonomy’s revenue using accounting tricks and “round-trip” transactions, but a jury cleared the entrepreneur after an 11-week trial. Lynch, who had faced a long spell in prison if convicted, said he had been granted a “second life” after the verdict.
Lynch’s net worth had been estimated at $US450 million ($686 million) in the separate US legal proceedings.
On Tuesday, Justice Hildyard said HP had suffered a loss of about £646.2 million related to misleading accounting that meant it had overpaid for Autonomy. A further £51.7 million related to claims for deceit and misrepresentation by Lynch, in addition to a further £39 million for incorrectly booked financial deals.
HPE had pressed ahead with the lawsuit after Lynch’s death, saying it was “in the best interest of shareholders”.Credit: Bloomberg
The total could be much higher once interest and legal costs are taken into account. A further hearing will follow in November to determine the details of the settlement and a potential appeal.
HP had sued Lynch and Autonomy’s chief financial officer, Sushovan Hussain, in 2015 seeking $US5 billion. In 2022, Justice Hildyard sided with the company, saying the pair had been “dishonest” and “obsessed” with propping up Autonomy’s share price.
Hussain settled privately with the company, now known as HPE, earlier this year, meaning the bulk of the damages announced on Tuesday will be owed by Lynch’s side.
However, the damages are far less than HP had been seeking, and substantially less than the $US8.8 billion that the company wrote off Autonomy’s value when it accused Lynch of improper accounting.
In a posthumous statement written before his death, Lynch said: “Today’s High Court ruling reflects that HP’s original $5 billion damages claim was not just a wild overstatement – misleading shareholders – but it was off the mark by 80 per cent.
“HP acquired Autonomy for $11.6 billion and today’s judgment is a view that Autonomy’s actual value was not even 10pc below the price HP paid. This result exposes HP’s failure and makes clear that the immense damage to Autonomy was down to HP’s own errors and actions.
“An appeal process will be considered later this year. The English civil case included hearsay evidence from the US, and we were never able to question or cross-examine those witnesses.
“This is in direct contrast to the rights of defendants in the US legal system. When in the US criminal trial we were able to cross-examine the relevant witnesses, a very different story emerged. Why is the English legal system so trusting?”
HPE had pressed ahead with the lawsuit after Lynch’s death, saying it was “in the best interest of shareholders”.
Jeremy Sandelson, a lawyer who is managing Lynch’s estate, said he would consider whether to appeal.
“This detailed judgment awards substantial damages to HP. As administrator, it is now my duty to consider the interests of all parties with a stake in Dr Lynch’s estate, including HP and Dr Lynch’s widow,” he said.
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“I will now be examining the judgment carefully and assessing the appropriate next steps, including whether to appeal both the original 2022 finding of civil liability against the late Dr Lynch and the damages awarded today.”
An HPE spokesman said: “We are pleased that this decision brings us a step closer to the resolution of this dispute. We look forward to the further hearing at which the final amount of HPE’s damages will be determined.”
Telegraph, London
