The landmark civil fraud trial over HP Inc.'s botched acquisition of U.K. software firm Autonomy Corp. PLC started March 25 in London, with the U.S. technology giant accusing Autonomy founder Mike Lynch of inflating revenue figures before the company sale, media reports said.
Hewlett Packard bought Autonomy for more than $10 billion in 2011 but wrote down $8.8 billion of the deal's value in 2012. The company sued Lynch and former Autonomy CFO Sushovan Hussain for more than $5 billion on claims that the two manipulated their company's accounting information, resulting in an overpriced acquisition.
Lynch employed fraudulent practices, such as buying and selling third-party hardware, to increase Autonomy's revenues or invent nonexistent sales, HP alleged, according to the Financial Times report.
The alleged inflated revenue figures came between the second quarter of 2009 and the second quarter of 2011, according to the complaint.
"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,'' the report quoted HP lawyer Laurence Rabinowitz as saying.
Lynch and Hussain denied the allegations, with the former playing down the case as "a dispute over differences between U.K. and U.S. accounting systems."
The fraud trial, considered the biggest in the U.K., is set to last nine months, according to Bloomberg.
The U.S. government on March 22 filed three criminal charges against Lynch over the Autonomy deal, in addition to 14 counts of conspiracy and fraud filed in November 2018, the Financial Times reported.