“This is a momentous day in the history of Autonomy,” Mike Lynch stated in a press release on August 18, 2011. It announced the sale of Autonomy, his software company, to Hewlett-Packard for $11 billion.
For Lynch, June 6, 2024 would be more significant.
After a saga that lasted almost 13 years, Lynch – once dubbed “the British Bill Gates” – was acquitted of fraud after a lengthy trial in the heart of Silicon Valley. The verdict represents a surprising change of fortune for the businessman.
On Thursday, Lynch said he was “elated” to have been found not guilty. “The truth finally prevailed,” his lawyers declared.
He now plans to return home to the UK, where he still faces a fight to clear his name. HP largely won a civil lawsuit against Lynch and Sushovan Hussain, another top autonomy executive, in London two years ago. The company is asking for $4 billion in damages. Lynch has previously indicated that he plans to appeal the ruling.
By all indications, the acquisition was disastrous. Just five weeks after it was announced, the HP CEO who signed the deal was fired. Lynch left Autonomy after less than a year. The lucrative acquisition had fleetingly cemented Lynch’s reputation as one of Britain’s most successful tech tycoons. His real legacy was more than a decade of bitter legal disputes.
In November 2012, HP’s new management wrote down the value of Autonomy by $8.8 billion, citing “serious” accounting irregularities, disclosure failures, and “completely misstated statements” prior to the purchase. After years of investigations and legal proceedings on both sides of the Atlantic, a US federal grand jury indicted Lynch on criminal charges in November 2018. With the civil case concluded, the UK agreed to extradite him.
His legal problems increased last year. Having largely lost the civil suit in the United Kingdom, Lynch lost an attempt by the United Kingdom High Court to appeal his extradition. Weeks later, he was on a plane to California.
This trial in San Francisco, on more than a dozen counts of fraud, represented a steep climb for Lynch, who fought unsuccessfully to avoid extradition to the United States. Federal prosecutors have a fearsome track record of guilty verdicts, and Lynch’s lawyers were forced to adjust his defense before trial.
From the beginning of this saga, Lynch insisted that Autonomy’s collapse was the result of HP’s mismanagement of a prized asset and not fraud. But the U.S. District Judge presiding over the trial, Charles Breyer, barred Lynch’s lawyers from presenting evidence they said made the case.
Unable to focus on the consequences of the acquisition, Lynch’s defense rested on three key arguments: first, that running a company like Autonomy is much more complicated than prosecutors would like the jury to believe; secondly, that Lynch was a very different man from the character he had been portrayed as; and third, that HP was quick to close the deal, applying due diligence.
The government’s case was “black and white,” Reid Weingarten, one of Lynch’s attorneys, declared in the early days of the trial. “And you know what? In this trial you will see that the world does not work like that. The world works in gray. The world is complicated.”
Life is “nuanced and messy,” Lynch told the court, suggesting his trial was effectively “looking in the door and seeing the sausage being made.” One thing to keep in mind is that if you take the microscope to a spotless kitchen, you will always find bacteria. And I don’t think autonomy is any different.”
Prosecutors attempted to portray Lynch as an intimidating and ruthless businessman responsible for all facets of the Autonomy empire. Jurors heard about the piranha tank in the atrium of the company’s headquarters and about meeting rooms named after James Bond villains.
Lynch found it “surreal” to hear government witnesses testify about many discussions and decisions that he said he had no knowledge of. He said he delegated jobs he had no experience in and that in his final years at Autonomy he spent “about 30%” of his time with family and other interests.
“We think the better you know him, the better off we’ll be,” Weingarten told the jury, before Lynch testified.
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Prosecutors said Lynch had “500 million reasons” to commit fraud: one for every pound they claimed he had made from HP’s acquisition of Autonomy. But the company wanted to remain independent, according to Lynch.
It was one of the stars of London’s FTSE 100 stock index and was still looking to make its own acquisitions. According to Lynch, it was only a meeting with an HP executive at a luxury home in the English countryside that persuaded him to start considering a deal, and a 64% premium to Autonomy’s share price that finally drove the company to accept.
HP was so determined to quickly transform itself from a hardware maker to a software giant, Lynch said, that the first time he saw the Press release announcing the acquisition of his company was when it was launched. The process was a “complete disaster,” he reflected on the stand.
The prosecution argued that HP’s handling of the process was irrelevant. For years, they alleged, Lynch had orchestrated a massive fraud and Autonomy had used a variety of accounting tricks to inflate its sales growth.
But Lynch emphasized that HP “wasn’t fooled at all” about Autonomy’s value. A jury of Californians believed him, rejecting the case laid out in great detail by the US government, which called more than 30 witnesses.
Six years ago, in the same courtroom, a jury reached a different conclusion about one of Lynch’s closest business associates. Hussain, who worked as Autonomy’s chief financial officer, was convicted in 2018 on charges of conspiracy, wire fraud and securities fraud related to the deal. He was released from a US prison in January after serving a five-year sentence.
Lynch, who at the height of his career was awarded an OBE (Order of the British Empire) and advised the UK prime minister, spent much of the year before his trial watched by two armed guards 24 hours a day, under house arrest. cash. The specter of more than two decades in prison, if he were convicted, loomed large.
The businessman left the court on Thursday free. “I’m looking forward to returning to the UK and getting back to what I love most: my family and innovating in my field,” he said.
Another momentous day.
