Monday 25 March 2019 5:15 pm | Updated: Monday 03 June 2019 1:15 am

Autonomy founder Mike Lynch inflated sales before £8.4bn HP deal, court hears

The biggest civil fraud trial in UK history kicked off on Monday with Hewlett-Packard (HP) accusing entrepreneur Mike Lynch of inflating his software company’s revenues ahead of its £8.4bn sale to the US tech giant in 2011.

Lynch “committed a deliberate fraud” to bump up Autonomy’s revenue, the High Court was told.

HP is suing Lynch and former Autonomy chief financial officer (CFO) Sushovan Hussain for $5.1bn (£3.9bn), accusing Autonomy of inflating its revenue figures between the second quarter of 2009 and the second quarter of 2011.

Both defendants deny the claims.

The start of the trial comes days after US prosecutors hit Lynch with three additional charges in a separate investigation into Autonomy’s sale, which the businessman also denies. Lynch was in court to observe proceedings.

Lynch submitted written arguments ahead of the trial, in which he said he took on the role of a “statesman” at the FTSE 100 firm and was unaware of the alleged fraud.

However, the claimants say Lynch was a “controlling and demanding individual” who took a close interest in individual deals and would have been aware of any fraudulent activity at Autonomy.

In one email to a sales rep, submitted by HP as evidence of Lynch’s management style, the former chief executive said: “Stay up all night and get this done with your team… fail this and I have no need of people with this kind of attitude.”

Another email to Hussain, in response to the CFO’s request to roll leftover annual leave into the next year, said: “Thank you for your threat to take five weeks off between now and the year end, please do that and you will see the consequences.

“Sushovan, I am sick of dealing with this s*** from people… do what the f*** you like.”

Revenue was inflated through the sale of hardware, usually at a loss, and “improperly recognised revenues” in order to meet market consensus, HP claimed, telling the court the origin of the revenue was not revealed in financial statements.

Laurence Rabinowitz QC, for the claimants, told the court: “Once these fraudulent practices are stripped away, it becomes clear that, in truth, the Autonomy group was experiencing little growth and was falling consistently short of market expectations.”

He also said: “This is not a business dispute about how to apply accounting procedures. This is a fraud case.”

The trial continues.