Former Autonomy executive convicted of fraud over role in $10.3bn takeover by Hewlett Packard
By the C|C Whistleblower Lawyer Team
Sushovan Hussain, the former CFO of the British software firm Autonomy, has been convicted of wire and securities fraud in connection with Hewlett Packard’s (HP) 2011 acquisition of the firm. Hussain stood accused of artificially inflating Autonomy’s valuation, leading HP to buy the company for $10.3 billion. Soon after the acquisition, HP discovered serious accounting irregularities, causing it to write down Autonomy’s value by $8.8 billion.
According to prosecutors, Autonomy’s senior management raised the company’s share price by artificially augmenting the number of transactions on its balance sheet. Prosecutors likened the conduct to an “unsustainable Ponzi scheme,” all of which occurred on Hussain’s watch during his ten years as CFO.
In a statement following the verdict, HP said that “Mr. Hussain engaged in outright fraud and deliberately misled the market about non-existent sales through a series of calculated sham transactions.” The company described as “patently ridiculous” Hussain’s attempt “to depict the fraud as nothing more than a misunderstanding of international accounting rules.”
In another statement, Hussein’s attorney John Keker said that evidence excluded from trial indicated that HP was not misled by Autonomy’s financials. “Mr. Hussain defrauded no one and acted at all times with the highest standards of honesty, integrity and competence,” Keker said. He added: “It is a shame that the United States Department of Justice lent its support to HP’s campaign to blame others for its own catastrophic failings.”
On Friday, Hussein could be sentenced to 20 years in prison and a fine of $250,000, plus restitution, for each of the sixteen charges on which the jury convicted him. Hussein plans to appeal the judgment.