Friday, November 23, 2012

FBI Investigates Hewlett-Packard Company (NYSE:HPQ) Claims of Autonomy Committing Fraud

According to a recent report by Bloomberg, the FBI is conducting an investigation into Hewlett-Packard Company(NYSE:HPQ)’s  allegations about the fact that Autonomy executives had given them false information regarding the company’s accounts, before HP acquired it last year by paying a sum of $11.1 billion.

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The information comes from a source who is familiar with the matter, stating that the Securities and Exchange Commission approached the FBI as criminal acts might be involved in this case. HP CEO Meg Whitman had accused Autonomy executives a day before, of misleading HP regarding the company’s financial situation, not providing crucial information, and behaving in a disorderly manner. HP had reported the matter to the SEC in the US and the Serious Fraud office in UK.

But former Autonomy CEO Mike Lynch has repeatedly denied the claims made by HP and has counter-accused HP of utilizing Autonomy as a front for covering up its dismal fiscal numbers. Auditing for Autonomy used to be done by Deloitte for years and HP asked KPMG to take a look for reassurance. Whitman said that both auditors found nothing till someone told them what they should be looking for. Lynch’s departure from Autonomy last May was hurried and happened right after the poor sales figures came in.

However, the fact remains that HP is in the news for all the wrong reasons. When Leo Apotheker was CEO, the company unveiled what was a $10.3 billion buyout of Autonomy, but overall reactions made it clear that they were paying an astronomical amount. It was goodbye for Apotheker and Whitman was brought in as CEO. Former Chief Strategy Officer Shane Robison is also no longer with HP.

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