Sat. May 28th, 2022

Home Secretary Priti Patel has ordered the extradition of Mike Lynch, the billionaire founder of software maker Autonomy, to face a criminal trial in the US.

The move comes hours after Lynch lost a high-profile civil lawsuit filed by Hewlett Packard Enterprise following its $ 11 billion takeover of the British technology company more than a decade ago.

The Home Office confirmed that Lynch’s removal to the U.S. was ordered late Friday. He faces 14 charges of conspiracy and fraud related to the Autonomy Agreement.

Lynch on Friday vowed to appeal against Patel’s decision and continue his fight against U.S. extradition, a process that could take years.

Lynch and Sushovan Hussain, Autonomy’s former chief financial officer, were sued by HPE for allegedly manipulating the software group’s accounts, which resulted in the Silicon Valley company paying an extra $ 5 billion when it acquired Autonomy in 2011. .

Mr. Judge Robert Hildyard ruled on Friday that HPE had “substantially succeeded” in its claim against Lynch, although the amount of damages would be “significantly less” than the $ 5 billion claimed by HPE. Lynch and Hussain both denied the allegations and any offense during the nine-month trial. Hildyard will deliver his full verdict at a later stage.

The conclusions Hildyard came to are significant because the civil lawsuit in London covered the same allegations and heard from some of the same witnesses who had to testify in the U.S. criminal trial. The judge’s conclusions were drawn Friday morning, meaning Patel had time to consider them when making her decision.

Patel’s decision now means that Lynch must file an extradition appeal within days, which effectively sets in motion a lengthy legal process.

Chris Morvillo, the lawyer at Clifford Chance representing Lynch, said his client had firmly denied the US criminal charges and would continue: “He is a British citizen who ran a British company in Britain subject to British laws and regulations and this is where the issue needs to be resolved. ”

Hildyard’s ruling came two years after the Supreme Court hearing ended and was delayed due to the unusual complexity of the case, one of the UK’s largest civil fraud trials.

The judge read out a summary of his conclusions in a high court hearing on Friday. He found that a hardware resale program by Autonomy was there to cover shortcomings in software revenue, that it was “dishonest” and that the defendants were “well aware of this”.

These “loss-making transactions were by no means commercially justified,” the judge said of the hardware resale program. They were silenced because their revelation would have revealed that Autonomy’s software business was not making the accelerating profits “that strongly affected its price”.

He found that HPE relied on what was said about Autonomy’s revenue in accounting material and was induced to pay $ 11 billion for Autonomy.

Lynch and Hussain were aware of Autonomy’s sales to value-added resellers (VARs) that were intended to supplement deficits in the software business. Autonomy’s accountants, Deloitte, “did not see the full picture”, the judge added.

In the high court hearing, HPE accused Lynch of telling “lie after lie” and that he was “unreliable” in the witness box. During the court hearings, Lynch accused HPE of bringing the lawsuit because his board suffered “buyer remorse”. Meg Whitman, HP’s CEO at the time of the deal, saw Autonomy as a “headache” because the company “plodded and its firefighting was on many fronts”, he claimed.

HPE has filed the lawsuit following its decision to impose an $ 8 billion impairment charge on the November 2012 deal, which it blamed on “improprieties” by the Autonomy team.

In September 2020, a decision by the Financial Reporting Board ordered Deloitte to paid a record fine of £ 15 million, plus legal costs of £ 5.6m, for serious misconduct over his audit of Autonomy.

HPE said in a statement on Friday: “Dr. Lynch and Hussain defrauded the market and Hewlett-Packard and deliberately misled them. HPE is glad the judge held them accountable. “

Kelwin Nicholls, a Clifford Chance lawyer representing Lynch, said in a statement that the Supreme Court ruling was “disappointing” and that Lynch was planning to file an appeal.

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