Meg Whitman, the former chief executive of Hewlett-Packard, was “out of her depth” and “could not cope with all the fires” at the company, Mike Lynch, the founder of software firm Autonomy, told a London court.
Lynch was making his first statements to the High Court in a $5-billion civil trial brought by Hewlett Packard Enterprise against him and his former associate Sushovan Hussain.
The two men are accused by HPE of masterminding fraudulent accounting at Autonomy, which Hewlett-Packard bought for $11 billion in 2012, only to write off $8.8 billion of its value a few months later.
On Wednesday Lynch denied misleading investors, auditors and the market. He told the court that Autonomy was “one of the most successful companies England has ever produced.”
He said in a witness statement that he had been made a “scapegoat” when HP, under Whitman, failed to integrate Autonomy and blamed “managerial infighting, poor planning, lack of leadership and, most critically, HP’s decision to push out the key people responsible.”
He said that by 2012 HP was riven with political infighting and Whitman was “out of her depth” because “HP was in total crisis and Whitman could not cope with all the fires.”
Lynch said the majority of the disputed transactions identified by HPE “generally occurred below my level” and as an FTSE 100 chief executive, “I was not aware of every transaction going on around the world in all of Autonomy’s various subsidiaries.” He said he relied on accountants Deloitte and added, “I do not believe that there was anything materially wrong with Autonomy’s accounts.”
Lynch’s testimony will be monitored closely by the Department of Justice in the U.S., where he faces being extradited to stand trial in California over 17 criminal charges of securities and wire fraud over the Autonomy deal. Hussain has already been convicted in a U.S. trial over the Autonomy deal and is serving five years in prison.
Dressed in a blue suit, white shirt and spotted tie and wearing a hearing aid, Lynch joked with his lawyers before he took the stand. He has attended court almost every day since the trial started in March.
HPE has called a string of high-profile witnesses including its former chief executives Meg Whitman and Léo Apotheker and has sought to paint Lynch as a “controlling and demanding” man who took an “unusually hands-on” role and “knew the improper means that were being deployed to misrepresent Autonomy’s performance.”
It claimed that Lynch “created an oppressive work environment,” where employees felt “extreme pressure” to meet revenue goals. Last week Robert Youngjohns, a general manager of Autonomy in late 2012, testified that it seemed that Autonomy staff felt “under constant scrutiny” and there were concerns “meeting rooms might be bugged.”
In turn Lynch’s legal team has highlighted HP’s political infighting and argued that the dispute stems from a misunderstanding of British and U.S. accounting rules.
The case continues.
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