DAY 1: Tech entrepreneur Mike Lynch fights extradition to the US
British tech entrepreneur Mike Lynch began earlier today his fight against his extradition, slamming the US for “overreaching” and saying the UK authorities could prosecute the alleged fraud.
Alex Bailin QC, for Lynch, said the US Department of Justice (DoJ) is “not the global marshall of the corporate world”, as he launched the former Autonomy boss’ bid to block extradition to face trial in America.
Bailin said if Lynch is able to successfully resist extradition it would not be a “get out of jail free card, as the UK’s Serious Fraud Office (SFO) has reserved the right to prosecute the alleged fraud in Britain.
Fraud, wire fraud and conspiracy
Lynch is facing charges of securities fraud, wire fraud and conspiracy in the US related to the 2011 acquisition of software firm Autonomy by tech giant Hewlett Packard (HP).
Following the sale, HP wrote down Autonomy’s value by $8.8bn and claimed Lynch, and the firm’s ex-finance chief Sushovan Hussain, had falsely inflated its revenue prior to the acquisition.
Alongside the US attempts for Lynch to face criminal charges, the tech entrepreneur is also waiting for the judgement in a separate civil fraud trial in the UK.
HP sued Lynch and Hussain for $5.1bn (£3.96bn) for allegedly falsely inflating Autonomy’s revenue prior to the 2011 sale.
Lynch has denied all of the criminal and civil allegations against him.
“The court has examined the allegations in this case in one of this country’s most complex civil court trials,” Bailin said.
He added: “There is no good reason why the criminal allegations could not also be tried here…if Mr Lynch is successful in resisting extradition. The SFO has expressly reserved its right to prosecute him in the UK.”
“Extradition is built on the position of mutual recognition, part of this court’s proper legal duty is to ensure that relationship is kept within appropriate boundaries and doesn’t overreach itself.”
Forum bar
Lynch’s legal team has invoked the forum bar – which was added to the Extradition Act in 2003.
The bar enables courts to block extraditions if it decides that a substantial measure of the alleged criminal activity took place in the UK.
Lynch – who founded Autonomy in 1996 – submitted himself for arrest in London in February last year in relation to the extradition case, and was subsequently bailed for £10m and ordered not to leave the country.
The extradition attempt has faced backlash from UK politicians, who have accused the US of misusing the agreement.
Critics have said the US should wait for the outcome of the UK civil trial before pushing ahead with its own criminal investigation.
HP was the victim, US legal team claims
However, Mark Summers QC, for the US Government, argued that the losses occurred in the US.
“Where was the loss always intended to occur? In America,” he told Westminster Magistrates’ Court this afternoon.
“Where was the place that most of the loss occurred? That is completely straight forward.
“The victim ultimately settled on was Hewlett Packard. It is an American company, its shareholders are predominantly in the US.”
UK reputation ‘dented’
Summers said the alleged fraud has caused reputational harm to HP and the UK financial market.
“You would have hoped that the UK stock exchange, auditors and accounting standards would have stopped this fraud,” he said.
“Unfortunately, the auditors fell asleep at the wheel. The reputation and integrity of the UK as an international financial centre has no doubt been dented by what it allowed to occur.”
The proceedings continue tomorrow.