By Lisa Fleisher
LONDON--British authorities said they had closed a nearly
two-year-old probe into alleged accounting issues related to
Hewlett-Packard Co.'s $11-billion purchase of U.K. software company
Autonomy in 2011--representing a home-court victory for Autonomy
founder Mike Lynch.
Mr. Lynch and H-P have battled publicly over the sale, and over
who was to blame for billions of dollars in H-P write-downs in the
wake of the deal. U.S. officials continue to investigate, the
U.K.'s Serious Fraud Office said in a short statement Monday.
The SFO said it didn't have enough evidence related to some
allegations for a "realistic prospect of conviction" in the
investigation. The agency said it had ceded jurisdiction in other
aspects of the probe to the U.S., saying that the American
investigation is "ongoing."
H-P purchased Autonomy--a fast-rising software company that
specialized in data analysis and was a darling of the U.K. tech
scene--in a bid to remake itself as a software-focused company.
Just over a year later, H-P wrote off $8.8 billion related to the
purchase, including $5 billion that it said was related to "serious
accounting improprieties" and misrepresentations by Autonomy
management, including Mr. Lynch.
H-P said Autonomy management misled the U.S. company into
thinking that much of Autonomy's revenue came from software sales,
rather than money-losing hardware sales. The company also accused
Autonomy of improperly accounting for deals to inflate revenue
ahead of the sale.
Mr. Lynch has publicly fought back against H-P, asking the
company to provide more details about the claims. He said
Autonomy's accounting conformed to international accounting
practices. On behalf of other senior Autonomy management, he has
periodically posted documents online that he says raise questions
about the motivation behind the write-downs, including alleging
that H-P executives knew they were overpaying and had unrealistic
expectations for Autonomy revenue.
H-P referred its fraud allegations to the U.S. Justice
Department and the Securities and Exchange Commission. Britain's
SFO started its own investigation in early 2013, after being asked
to by H-P, the agency said Monday.
The Justice Department declined to comment, while the SEC didn't
immediately respond to a request for comment.
Amid the probes, Mr. Lynch has reinvented himself--at least in
the U.K.--as a tech-focused, venture-capital investor and a tech
adviser to the government.
On Monday, Mr. Lynch welcomed the closure of the investigation
by U.K. authorities. H-P "made allegations of a $5 billion fraud,
and presented the case in public as a slam dunk," he said in his
own statement.
For H-P, the move could reduce H-P Chief Executive Meg Whitman's
ammunition in the company's public-relations campaign against
Autonomy management. H-P remains embroiled in litigation and
regulatory scrutiny over the Autonomy deal. Apart from the DOJ and
SEC probes, H-P is trying to settle shareholder litigation over how
the company's board and advisers handled the Autonomy deal.
An H-P spokeswoman said the company "remains committed to
holding the architects of the Autonomy fraud accountable. As the
SFO made clear, the U.S. authorities are continuing their
investigation and we continue to cooperate with that
investigation."
Shira Ovide in San Francisco contributed to this article.
Write to Lisa Fleisher at lisa.fleisher@wsj.com
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