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Serious Fraud Office Drop Investigation Into Autonomy Accounting

Posted by Soulskill on from the government-agencies-with-funny-names dept.

mrspoonsi sends up an update on the investigation into Autonomy, a software company acquired by HP in 2011. HP paid a staggering $11.7 billion in the deal, then later wrote off $8.8 billion and claimed Autonomy's management intentionally defrauded them. The UK Serious Fraud Office opened a case on the matter in 2013, but that investigation has now been dropped. According to the Office's press release, they felt there was "insufficient evidence for a realistic prospect of conviction," given the information they had to work with. Autonomy is not off the hook, however — the case has now been entirely ceded to U.S. authorities.

20 of 53 comments (clear)

  1. confusing headline. by nimbius · · Score: 2

    As a DevOps engineer I was momentarily confused by the headline. Having had my usual 4 pints after work, i'd attributed the error to malted hops and barley. The reality however was that I'd failed to remember UK government and administrative offices have very immediate names. In america we take care to cloister our offices in overly broad vague names.

    --
    Good people go to bed earlier.
    1. Re:confusing headline. by ATMAvatar · · Score: 2

      If we gave our offices very specific names, people might notice when there is overreach and a subsequent expansion of power/budget.

      --
      "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."
    2. Re:confusing headline. by psm321 · · Score: 2

      The weird British pluralization doesn't help either (drop vs. drops)

    3. Re:confusing headline. by _merlin · · Score: 3, Informative

      I think you might be inebriated: it's malted barley and hops. In fact, I'm pretty sure you can't malt hops.

    4. Re:confusing headline. by Anonymous Coward · · Score: 5, Funny

      Yes, the originators of the language have clearly got it wrong.

    5. Re:confusing headline. by Anonymous Coward · · Score: 5, Interesting

      Yes, the originators of the language have clearly got it wrong.

      The funny collective-noun-plural-verb thing is an innovation by the Brits. In England, the language continued to develop during the 1800s and even 1900s, while it remained more or less fixed in the US (partly under the influence of Noah Webster) subsequent to independence. Thus Shakespeare writes "The army is discharged all and gone" in Henry IV, not "The army are discharged all and gone."

  2. Just a thought... by Frosty+Piss · · Score: 3, Insightful

    So, in their quest to be like Facebook and Google by snapping up technology for obscene money, they forgot to do "due diligence", and now they are pissed?

    HP used to be such a great technology company, until they switched to the printer ink scam... At least they sold off their bench test equipment designs to a company that is still producing fairly nice stuff.

    --
    If you want news from today, you have to come back tomorrow.
    1. Re:Just a thought... by khasim · · Score: 3, Insightful

      So, in their quest to be like Facebook and Google by snapping up technology for obscene money, they forgot to do "due diligence", and now they are pissed?

      At $10 BILLION I don't think there is any "forgot" here.

      Even at the time of the deal the price was questionable. It was 10x more than Autonomy was possibly worth.

      I would say "follow the money" but it is sounding like someone did not complete their part of the deal.

      HP used to be such a great technology company, until they switched to the printer ink scam.

      Yeah. This sounds more like an attempt to loot the company that didn't pan out.

  3. When does the investigation into HP start? by JoeyRox · · Score: 3, Insightful

    For executive gross negligence in failing to do proper due diligence before completing their horrible acquisition of Autonomy and then covering it up by attributing it to fraud.

    1. Re:When does the investigation into HP start? by NicBenjamin · · Score: 3, Insightful

      I doubt it.

      These shareholders are the exact same people who fired Walter Hewlett for opposing the Compaq merger.

    2. Re:When does the investigation into HP start? by fuzzyfuzzyfungus · · Score: 2

      They may well be absolutely lacking in foresight; but it's hard to imagine the density needed to ignore the size of the writedown HP took on autonomy. Buying Compaq was a lousy plan, and the assorted nonsense about realizing synergies and leveraging things and so on failed to materialize; but with Autonomy HP HQ outright said "Well, we paid 10 billion dollars for something that we can now only value at 1.2 billion; because we fucked up." That seems like the sort of thing that would go right into 'your head on a platter, now' territory, were it my money on the line at that scale.

  4. This is serious... by __aaclcg7560 · · Score: 3, Insightful

    Autonomy is not off the hook, however â" the case has now been entirely ceded to U.S. authorities.

    Handed over to the U.S. Petty Fraud Department, where a slap on the wrist and a generous tax break for HP will be quickly administrated. Move along. Nothing to see here.

  5. HP Paid silly money by Anonymous Coward · · Score: 5, Informative

    HP paid silly money, all the details of Autonomy's accounting numbers were right there in the books, anyone who read the books said "you're stupid to pay that much", Oracle said as much publicly after they turned it down, saying it was way overpriced.

    http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/electronics/8796470/Oracle-and-Autonomy-row-escalates-as-Larry-Ellison-accuses-Mike-Lynch-of-lying.html

    "Mr Ellison claimed in an earnings call last week that Autonomy had been "shopped" to Oracle before the British software company agreed its controversial $11.7bn (£7.1bn) sale to Hewlett Packard"

    ""After listening to Mr Lynch’s PowerPoint slide sales pitch to sell Autonomy to Oracle, Mr Kehring and Mr Hurd told Mr Lynch that with a current market value of $6 billion, Autonomy was already extremely over-priced."

    The price HP paid NEARLY DOUBLE, the price that Oracle refused to pay as overpriced.

    The valuation was insane, based on FUTURE growth not present value, and growth is illusive, based on OPINION not fact, because nobody can see into the future. So you believed managements OPINION as to future growth and didn't estimate your own numbers, HP.

    Now they try to get a prosecution because management willfully misled you? They painted too rosy a future? F*off. You're just incompetent. Oracle correct said it was overpriced, and you didn't, and paid nearly double the price Oracle said was too much.

    1. Re:HP Paid silly money by Anonymous Coward · · Score: 2, Insightful

      They painted too rosy a future? F*off. You're just incompetent.

      That's damn right. What do they think this is, nursery school? HP lost money because management was stupid and the shareholders lost money because they put their faith in half wits. They both deserved to lose that money, it's how the economy reallocates resources to smarter people who will put them to more effective use. To quote Nelson Muntz, "Ha Ha"!

    2. Re:HP Paid silly money by bluefoxlucid · · Score: 2

      Management estimates, not opinions. Management estimates have a risk attached to them, and it can be a really solid risk: you can have a 1% chance of hitting it big, or a 95% chance of taking market dominance; and you can predict this quite easily, if you know what you're doing.

      In this case, HP and Oracle assert that they were looking at made-up bullshit, not management estimates: Autonomy was throwing out this ideal situation that had near-0% likelihood of occurring, and claiming it as the high-probability outcome.

      Risk computations aren't opinions; they're solid, concrete, mathematical facts.

      --
      Support my political activism on Patreon.
  6. Just another in a long series of misguided mergers by Bruce+Perens · · Score: 5, Insightful

    HP has a very long history of buying companies only to unload them for cents on the dollar a few years later. Remember Palm and WebOS? Take a look at the HP Acquisition List on Wikipedia. Not many of those companies were good buys.

    This was another of many issues that contributed to staff depression while I was there and continues to this day. We could see it was wrong, but could do nothing about it.

    They used to be the company engineers wanted to work for. When I got to Pixar in '81, the engineers that had been at HP were still proud of having worked there. It's really sad what's happened.

    --
    Bruce Perens.
  7. Re:Just another in a long series of misguided merg by jones_supa · · Score: 2

    I just meant the Wikipedia article.

  8. Re:Just another in a long series of misguided merg by GerryHattrick · · Score: 2

    Remind us how much they had to write off after they'd bought EDS, whose star was already on the wane (because customers had sussed the business model). Utterly predictable.

  9. Hardly ever happens with tech buyouts by rmdingler · · Score: 2

    NewsCorp for MySpace, Apple for Beats, Facebook for WhatsApp, HP for 3Par & Compaq, and Microsoft for the AOL patents...

    --
    Happiness in intelligent people is the rarest thing I know.

    Ernest Hemingway

  10. Re:Just another in a long series of misguided merg by Baussian · · Score: 2

    They used to be the company engineers wanted to work for. When I got to Pixar in '81, the engineers that had been at HP were still proud of having worked there. It's really sad what's happened.

    They are now the company IT managers want to work for.

    Today's HP internal management culture is one where technical staff is being sneered at and technical ignorance is a badge of honor.

    The company has lost it's way some time around the Compaq merger and is now slowly rotting from the inside.