Re: Due diligence &c
"I don't believe it's THAT easy to get charges brought against someone in the US - Hussain was convicted in April of charges related to this situation. El Reg is skimpy with the facts here as Lynch faces securities fraud, wire fraud and conspiracy charges. Lynch made 815 million USD from the sale. Read the indictment yourselves - looks like there were shenanigans got to do with valuation of the company, including lying to the independent auditor about revenue.
In the fraud case in the UK the only things that HP have pointed to were:
1. That Autonomy were not a 'pure' software company as they had a proportionally small income from hardware sales, often sold to facilitate the use of their software. HPs argument is that for Autonomy to say they were a 'pure' software company when they had any income whatsoever from hardware sales however small constituted fraud. The basis for this is that a sofwtare business can have higher margins than a hardware business.
2. There were a small number of transactions that could potentially characterised as circular. The contention is that these were artificial to bolster revenue. Problems with HP's argument is that the transactions concerned are at least plausibly, genuine, amount to sums which are irrelevant in the overall business and contradict and mutually undermine HP argument about 'pure' software. The issue is that HP have argues that being a pure software company is important as they valued autonomy on the basis it was a high margin business. The suppossed circular transactions reduce margins, so on HPs argument would have had the effect of depressing the purchase price.
Lynch has strong defences that the small facilitating hardware sales were an essential part of software sales and common knwoledge and practice to anyone familiar with this area of business and that the circulaar transactions were genuine.
HPs big problem is that if everything the allege was true it doesn't make a significant difference to any business valuation, that commentators at the time thpough the purchas eprice was grossly excessive based on Autonony's published accounts and HP did not bother to complete due diligence so were clearly negligent and reckless in the purchasing process.
The charges in the US clearly are specious sif HP cannot convince a court in a civl court to a much lower standard of evidence that any fraud happene at all. The conviction of Hussein was very troubling at the time and appears even more so now. Husseins main problem seems to stem from a refusal to cooperate in providing false testimony to help convict Lynch.