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Mike Lynch tells US jury Autonomy ‘wasn’t good’ however denies fraud

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British tech entrepreneur and former Autonomy chief government Mike Lynch advised jurors in San Francisco federal court docket that he was not concerned within the transactions on the coronary heart of a felony case alleging he took half in one of many greatest fraud instances ever to hit Silicon Valley.

The testimony from Lynch on Thursday got here throughout a trial through which he and Autonomy’s former vice-president of finance, Stephen Chamberlain, face a number of costs of wire fraud and conspiracy.

They’re accused of involvement in a scheme to overstate Autonomy’s revenues forward of an $11.5bn acquisition by Hewlett-Packard in 2011 utilizing advanced and unlawful accounting strategies, together with backdating gross sales, participating in “spherical journey” transactions with prospects to pay them to purchase merchandise and falsely dressing up {hardware} offers as software program offers.

US prosecutors on the trial, which began in March, have portrayed Lynch because the driving power behind a fraudulent deal through which HP tried to reinvent itself as a software program firm solely to put in writing down Autonomy’s worth by $8.8bn and lay off 1000’s of workers.

Lynch, 58, was carrying a darkish go well with, white shirt and blue tie, and appeared relaxed as his testimony received underneath manner on Thursday, addressing the jury immediately whereas sometimes chuckling and exchanging quips together with his lawyer. 

Lynch advised jurors the weeks of trial testimony had been “surreal” to him. “I’ve sat and watched a parade of witnesses that I’ve by no means met . . . and a collection of transactions I had no involvement in, and never a lot else,” he mentioned. 

Whereas Autonomy “wasn’t good”, it was a profitable enterprise, and the yr earlier than the HP acquisition “it was placing $300mn within the financial institution”, Lynch testified. 

Lynch was fired by HP in 2012 over the underperformance of the enterprise. In 2022 a UK decide in a civil fraud case discovered Lynch responsible for defrauding HP. He was extradited to the US final yr to face federal felony costs, to which he has pleaded not responsible, and has been residing underneath home arrest in San Francisco.

Lynch has claimed that HP tried to cowl up its mismanagement of Autonomy after the acquisition through the use of him as a scapegoat. The trial decide has positioned limits on what will be mentioned in entrance of the jury relating to points that arose post-acquisition.

The 60 per cent premium on its inventory value that HP was providing Autonomy shareholders within the acquisition was successfully inconceivable for a chief government to refuse, Lynch mentioned. “For those who tried to dam that deal . . . you wouldn’t be CEO.” 

Lynch mentioned Autonomy served greater than 20,000 prospects throughout greater than 20 nations from the beginning of 2009, with the allegedly fraudulent transactions at situation within the trial representing solely a “small” fraction of them. Lynch mentioned he had not been conscious of any of those offers.

“For those who take the microscope into even a spotless kitchen, you’ll discover a micro organism,” he mentioned.

Lynch additionally distanced himself from Autonomy’s former chief monetary officer, Sushovan Hussain. Hussain was sentenced to 5 years in a US jail for his function within the fraud in 2019. 

Lynch rejected any suggestion that he and Hussain have been childhood mates, though they attended the identical college. Requested what he might need performed in another way, Lynch mentioned he would have addressed Hussain’s rising involvement within the gross sales staff sooner.

Lynch described to jurors his modest background as a toddler of Irish immigrants in London within the Seventies, his early curiosity in know-how, his research and founding of Autonomy, and his present household life. Lynch’s spouse was current within the courtroom. His two daughters, he mentioned, couldn’t attend as they have been sitting college exams. At one level, as Lynch mentioned his farmhouse within the English countryside, he turned to his curiosity in livestock.

“The medieval breeds of pigs are actually strong, they keep out, they dwell within the woods, that form of factor,” Lynch defined. Shortly after, the decide advised the defence transfer on to the problems within the case.

Lynch’s testimony is anticipated to proceed for a number of days, with cross examination from the prosecution to comply with.

Lynch’s staff had requested a mistrial, saying the federal government had intentionally aimed to deliver the topic of his extradition into the trial. The decide denied the request on Thursday morning, however admonished the federal government for posing “fully improper” inquiries to one in every of Lynch’s authorized staff who testified on Wednesday.

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