Unlock the Editor’s Digest at no cost
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
Mike Lynch, as soon as one of many UK’s main tech entrepreneurs, was acquitted of prison costs by a jury in San Francisco on Thursday, capping a 12-year authorized saga stemming from one among Silicon Valley’s greatest fraud circumstances.
The previous Autonomy chief govt was accused of falsely inflating revenues on the UK software program firm forward of its $11bn sale to Hewlett-Packard in 2011. The decision is a second of vindication for Lynch after an extended battle that noticed him extradited to the US and subjected to deal with arrest underneath 24-hour surveillance forward of the trial.
Lynch, 58, has lengthy claimed he was used as a scapegoat by HP for its personal botched acquisition and later mismanagement of Autonomy. He unsuccessfully argued that any prison costs ought to be heard within the UK. After a two-and-a-half-month trial, the jury, which started deliberating on Tuesday afternoon, discovered him not responsible on all counts, together with Stephen Chamberlain, Autonomy’s former vice-president of finance, who was additionally on trial.
Following the decision, Lynch mentioned he was “elated”, and was “trying ahead to returning to the UK and getting again to what I really like most: my household and innovating in my area”.
Prosecutors accused Lynch and Chamberlain of illegally inflating revenues within the two years earlier than the acquisition by backdating a few of Autonomy’s contracts, utilizing “spherical journey” offers to compensate clients for making purchases, and hiding the truth that a few of its high-margin software program income was actually coming from unprofitable {hardware} gross sales.
They confronted 14 counts of wire fraud and one rely of conspiracy. One other cost, of securities fraud, was thrown out by the choose close to the top of the trial.
A spokesperson for the US legal professional’s workplace in San Francisco mentioned: “We acknowledge and respect the decision. We want to thank the jury for its attentiveness to the proof the federal government introduced on this case.”
Lynch’s legal professionals, Christopher Morvillo of Clifford Probability and Brian Heberlig of Steptoe, mentioned in an announcement that the federal government had proven “profound over-reach” within the case. “This verdict closes the ebook on a relentless 13-year effort to pin HP’s well-documented ineptitude on Dr Lynch,” they mentioned.
The sale of Autonomy was a excessive level for the UK tech scene at a time when the “Silicon Fen” area round Cambridge, the place it was based mostly, was rising to prominence. Autonomy’s software program, used to kind by means of data that isn’t held in structured databases, was seen as a important piece of expertise for big corporations and governments, making it central to HP’s efforts to rebuild its floundering pc {hardware} enterprise round software program.
Nevertheless, the US firm wrote down its funding by $8.8bn only a yr later, blaming $5bn of the hit on what it claimed was the fraudulent elevating of Autonomy’s revenues within the years earlier than the deal. A successor firm, HPE, largely prevailed in a civil declare towards Lynch within the UK in 2022 and is in search of $4bn in damages.
Autonomy’s former chief monetary officer, Sushovan Hussain, was discovered responsible of fraud over related costs and launched in January after serving a five-year sentence within the US. Prosecutors argued that letting Hussain be seen because the central determine within the fraud had left Lynch free to personally train management “with out making a paper path” again to himself. They sought to depict him as a domineering and controlling boss who aggressively attacked critics.
Testifying throughout the trial, Lynch claimed he had left detailed accounting and contract issues to others and his personal consideration was targeted on technical and advertising points, leaving him unaware of any fraud.
Lynch, who accomplished a doctorate at Cambridge, rose to turn out to be one of many nice and the great of the UK’s tech business, serving on a science group that suggested the UK prime minister and on committees on the Royal Society. He was awarded an OBE for providers to enterprise in 2006 and in 2012 based enterprise capital group Invoke Capital, whose investments embrace the cyber safety firm Darktrace.
