HP Autonomy legal case takes religious twist with Vatican deal mystery

Vatican deal shrouded in mystery amid HP Autonomy legal spat

HP’s long-running saga over its acquisition of UK software firm Autonomy took another turn over the weekend after evidence relating to a deal supposedly signed with the Vatican came to light.

HP has been pursuing legal action against Autonomy for almost two years after it claimed the former management of the company, including CEO Mike Lynch, engaged in improper accounting activities.

This includes claims it would often add deals that had not been officially signed off or paid for in its quarterly figures. Reuters has now cited one such example of this coming to light with the Vatican, having seen case documents.

The documents claim Autonomy requested one of its resellers, US-based MicroTech, to buy software from it, to act as go-between for a deal it had struck with the Vatican for a library digitisation project, worth $11.6m.

However, when the CEO of MicroTech wrote to the Vatican chasing a payment he was told by the religious institution that no deal was struck and that Japan’s NTT Data Corp was the sole provider for the deal.

Reuters claims documents it has seen show Autonomy filed this deal on the last day of its quarterly revenues for the first quarter of 2010, helping it just beat its earning estimates from analysts.

HP did not comment directly on the incident but reiterated its stance that Autonomy management was engaged in such practices that led HP and its investors to be “misled”.

“The evidence shows that former senior Autonomy management used numerous tactics to misrepresent the reported financial metrics of the company,” it said in a statement.

“Among other things, they caused Autonomy to recognise revenue on transactions that never closed, engaged in round-trip transactions with resellers and other vendors that falsely inflated Autonomy’s revenues, used end-of-quarter negative-margin sales of hardware to meet or exceed market expectations, and misidentified categories of revenue to falsely create the illusion of a high-growth company.”

V3 requested comment on the report from Autonomy Accounts – the website set up by Lynch to manage his side of the argument – but had received no reply at the time of publication.

Earlier this year HP said it had uncovered evidence that Autonomy “resold generic hardware at a loss” to mask its real financial performance. Responding to this Lynch said that HP CEO Meg Whitman should quit the firm.

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Source: v3.co.uk
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