Autonomy facing US Govt ban at hands of US Air Force

Yes that's right - even the USAF reckons Autonomy, on whose purchase HP took a disastrous $8.8bn write down, was fiddling the figures.

by Andrew Saunders
Last Updated: 06 Jan 2014

The American fly-boys reckon that Autonomy took revenues from transactions before they were completed, in order to make quarterly sales targets.  Sounds like flying a bit too close to the sun, to us.

The claims are made in a ‘secret’ (well it’s not secret anymore) memo cited by several newspapers today. In it the USAF says that Autonomy, plus two other US government contractors MicroTech and Capax Global who acted as its agents, booked revenues before deals were completed, effectively claiming millions of dollars of software sales which never happened. It also lays out a case for banning Autonomy (and potentially other firms involved) from pitching for any US Govt work in future.  That could really hurt.

In reply, a spokesperson for Autonomy founder Mike Lynch’s private investment business told the FT that the firm’ strongly rejects HP’s allegations’ while another representative for Lynch himself said that Autonomy’s processes had been entirely compliant with international accounting standards.

It’s been a while since we’ve heard from the massive fraud investigations instigated by HP after it was forced to write off 75% of the $11.6bn it paid for Autonomy - founded by British entrepreneur Mike Lynch - in 2012. But this opening shot for 2014 suggest the story might be coming back to the boil again.  Expect more, similar charges to emerge in due course.

The USAF allegations do seem like relatively small fry in the grand scheme of things. Two major cases are cited - one being a deal booked by Autonomy for $11m which eventually completed for only $500,000, the other a deal for an undisclosed sum which never completed at all.

Not that that makes it OK, necessarily, but MT can’t be the only one wondering, ‘OK, but even if this is true, what happened to the other $8.79bn of HPs write-off?’ Big questions over the extent and nature of HPs due diligence remain to be answered.

But in a way, the details don’t matter so much as the general principal, which in this case you might call the ‘BP effect’. That is, any British company caught fouling the US corporate nest can expect pretty harsh treatment at the hands of the authorities there.  

Autonomy’s alleged transgressions may not be on anything like the same scale as BP’s, but the view form Capitol Hill probably looks rather similar anyway. HP, for all its well-documented and continuing woes, is a major US employer with the ear of those who matter in power. Autonomy is an upstart Brit firm which got caught, and must be made to pay.

The chances are that this scrap will now be won by the team with the biggest political muscles - and there is only one contender for that title.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today