The judge, Charles Breyer of the Northern District of California, has dismissed some of the evidence that Lynch’s lawyers say showed that HP mismanaged Autonomy after acquiring the company. Breyer also oversaw the trial of Hussain, who was convicted in 2018 of charges similar to those Lynch now faces. Hussain was recently released from a federal prison in Pennsylvania.
Last year, Lynch lost a bid to avoid extradition despite lobbying the British government, which had approved his transfer to the US on the same day as the judgment against him in the civil case brought by HP.
Last month, he sued the Serious Fraud Office, Britain’s securities regulator, over its handling of data requests by the US government. The lawsuit, a last-ditch bid to delay the US criminal trial, was settled this month.
Considerable legal resources
Lynch still has considerable resources to defend himself in the San Francisco courtroom.
“Mike Lynch has faith that he will be vindicated when he finally gets a chance to tell his story to a jury,” Reid Weingarten, one of several prominent white-collar defence lawyers representing Lynch in the US, said in a statement. “We look forward to this opportunity to tell Mike Lynch’s story and allow him to put this unfortunate chapter behind him.”
Since his extradition, Lynch has lived under 24-hour surveillance and court-mandated private security, a drastic fall for a man once considered one of Britain’s biggest tech success stories.
Mike Lynch in London in 2014. Bloomberg
Born into a working-class family outside London, he attended private school on a scholarship and graduated from the University of Cambridge before co-founding Autonomy in 1996. The company helped clients analyse unstructured information to unearth hidden insights about their businesses.
By 2011, Autonomy had become one of Britain’s most prominent technology companies, with its home base of Cambridge sometimes called “Silicon Fen”.
“He certainly raised the profile of Cambridge technology,” said Tony Quested, editor of Business Weekly, a technology trade publication based in Cambridge. “There wasn’t that much around at the time.”
Lynch became a celebrity in British tech circles. He was a member of the Royal Society, one of the country’s top scientific associations; an adviser to prime minister David Cameron; and a BBC board member.
HP, then led by Leo Apotheker, a former chief of German software giant SAP, hit upon the notion of buying Autonomy to transform itself from an ageing hardware provider to a higher-margin software company. HP agreed to buy Autonomy in mid-2011 for about 60 per cent more than its market value.
Things soured quickly.
Apotheker was out as chief executive a month after the deal was announced, as investors and analysts revolted against both the high price of the Autonomy acquisition and a plan to spin off HP’s personal computer division (which was born of another major takeover, of Compaq).
Clash with new boss
He was replaced by Meg Whitman, the former eBay CEO who sat on HP’s board. Within HP, Autonomy’s star quickly dimmed amid rapidly declining sales. Lynch, who clashed with Whitman, was fired as Autonomy CEO in May 2012.
Later that year, HP said it had been duped by Autonomy, misled by improprieties including the backdating of contracts and the use of hardware sales to bolster revenue, particularly at the end of a quarter. The multibillion-dollar write-down marked the beginning of Lynch’s legal travails, which will culminate this month in another long and complex trial.
Over the years, Lynch has denied the characterisation that the company was riddled with fraud. He has blamed Whitman, now the US ambassador to Kenya, and other senior executives who clashed with him for Autonomy’s disintegration. His lawyers have argued in court filings that HP executives, for example, knew about the hardware sales and hadn’t raised them as an issue.
They have pointed to internal emails showing the shifting calculations of Autonomy’s worth, at one point putting it at more than $11 billion. They have also noted that accountants for EY, the global accounting and consulting firm previously known as Ernst & Young, which was working for HP, had not thought the Autonomy takeover price was inflated because of accounting irregularities.
US federal prosecutors argued in court documents that Lynch, long known as a hard-charging boss, relished being tough and maintaining control. (In one filing, government lawyers described an internal sales video at Autonomy in which he portrayed himself as a mafia don, and noted that he had named conference rooms after James Bond movie villains.) Witness depositions have included Whitman and Catherine Lesjak, HP’s former chief financial officer.
The prosecutors have sought to introduce tens of thousands of exhibits and a 44-person witness list, and they estimate that the trial could last until the end of May.
Lynch’s freedom and his legacy are at stake.
He has sought to foster a reputation as a public intellectual by giving interviews on technology, but he has kept a low profile since his extradition. His last published piece was in April, when he encouraged British policymakers to embrace AI start-ups.
Autonomy is now part of the Canadian software company OpenText. Lynch’s investment firm, Invoke, has made crucial early investments in companies like cybersecurity provider Darktrace.
But associations with Lynch can be fraught. In December, Darktrace shareholders rejected a nominee for the board proposed by Invoke. And in the company’s financial filings, Darktrace has described “Autonomy related matters” as a risk “from both a reputational and a legal perspective”.
This article originally appeared in The New York Times.
