Federal investigators probe HP’s Autonomy division
US Department of Justice investigators are looking into allegations of accounting fraud at Autonomy, a British software company with offices in the Boston area that Hewlett-Packard Co. bought last year for $11.1 billion.
HP officials have accused former Autonomy executives of misrepresenting the company's finances and inflating its revenue figures prior to the acquisition. Last month, HP took an $8.8 billion charge because it said Autonomy wasn’t worth the original price tag.
On Thursday, HP officials said on the company’s website that officials from the UK Serious Fraud Office, the US Securities and Exchange Commission’s Enforcement Division, and the US Department of Justice are investigating the matter.
The company has also initiated its own investigation. “We believe we have uncovered extensive evidence of a willful effort on behalf of certain former Autonomy employees to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers,” it said in a statement.
When HP took the write-down last month, a company spokesman for the Palo Alto, Calif., software giant said Autonomy’s local offices would not be effected.
The British software outfit entered the local market when it bought part of the Boston document storage company Iron Mountain Inc. for $380 million in cash last year. Autonomy purchased some of Iron Mountain’s digital products, and took over an office in Southborough with about 500 Massachusetts employees. Autonomy also has an office in Boston.
Meanwhile Autonomy’s former chief executive officer, Mike Lynch, has vocally refuted the HP allegations. On his blog, Lynch has called on HP to release more details to support its charges.
“While Dr. Lynch is eager for a debate, we believe the legal process is the correct method in which to bring out the facts and take action on behalf of our shareholders,” HP said in its statement Thursday. “In that setting, we look forward to hearing Dr. Lynch and other former Autonomy employees answer questions under penalty of perjury.”
HP’s stock dropped 2.5 percent Friday to close at $13.68.Material from the Associated Press contributed to this report. Michael B. Farrell can be reached at email@example.com.