The former CEO of Autonomy, the British multimedia company acquired by Hewlett-Packard Co. (NYSE:HPQ) last year, blasted accusations the deal was based on fraud.
“Simply put, these allegations are false,” said Mike Lynch, who remained with Autonomy until May.
HP, of Palo Alto, Calif., has charged the $10.3 billion deal undertaken by prior CEO Leo Apotheker, was marred by fraud and asked the FBI, British authorities and the U.S. Securities and Exchange Commission to investigate it.
As well, current HP CEO Meg Whitman has written off the entire deal and took an $8.8 billion charge for the company's fourth quarter ended Oct. 31 to account for it.
HP is the biggest computer company, although the annual revenue of Apple (NASDAQ:AAPL), was $26 billion greater for its fiscal 2012, which ended a month earlier. HP doesn't sell smartphones, consumer electronic appliances and entertainment like Apple.
Lynch, though, charged HP CFO Cathie Lesjak and her staff had access to all Autonomy documents post-acquisition and “raised no issues,” completed a detailed study of the unit's global tax structure and approved a third-party evaluation of assets completed last January.
The former CEO acknowledged there may be some disagreement in accounting practices between U.S. and British companies, but noted Autonomy's accounting policies were “made clear” in its 2010 financial reports HP executives saw before the acquisition.
HP officials didn't respond to the allegations. On Thursday, the company, in an SEC filing, disclosed it's been sued by at least six shareholders over the deal in U.S. District Court in San Francisco but didn't provide more details.
In a second comment on Friday, Lynch said HP's filing was less comprehensive than it should have been because it didn't inclide many of the details the company made in its original charges of fraud. In the latest filings, the company said it "believes" there had been accounting improrities, compated with last month's charges of "serious accounting improprieties, misrepresentation and disclosure failures."
As well, the former Autonomy chief asked why HP now claims there's a $5.7 million "impairment charge" on the deal is directly charged agaisnt alleged "improprieties" and how much is for other things such as poor business performance?
HP wrote that management “is cooperating” with the Justice Department in the Autonomy probe.
Shares of HP fell 36 cents to $13.68 in Friday trading. Even with dividends, shareholders have lost 44 percent on them over the past 52 weeks.