The former CFO of Autonomy has been indicted by US prosecutors on charges of fraud and wire fraud, in relation to HP’s controversial purchase of Autonomy in 2011.
According to the indictment filed 10 November in the US, Sushovan Hussain, a British resident, allegedly tried to deceive investors in Autonomy and HP – the US company which bought the British technology business in 2011 for $11bn – about “the true performance of Autonomy’s business, its financial condition and its prospects for growth”.
US prosecutors allege Hussain artificially inflated Autonomy’s revenue in the two years prior to HP’s acquisition of the company thereby causing HP to overpay. However Hussain’s US lawyers counter the charges, saying that the former CFO adhered to UK accounting rules at all times for the UK-based technology company.
A statement from John Keker, representing Hussain, said he was “innocent of wrongdoing”.
“He defrauded no one and, as Autonomy’s CFO, acted at all times with the highest standards of honesty, integrity and competence. He will be acquitted at trial,” states Keker.
“It is a shame that the Department of Justice is lending its support to HP’s attempts to blame others for its own catastrophic failings.”
According to the indictment, between 2009 and 2011 Hussain artificially inflated Autonomy’s revenues by backdating written agreements to record revenue in prior periods; recorded revenue on contracts that were subject to side letters or other contingencies that impacted revenue recognition; improperly recorded revenue for reciprocal or roundtrip transactions; and made false and misleading statements to Autonomy’s independent auditor about transactions allegedly supporting the recognition of revenue and other items in Autonomy’s financial statements.
No date has yet been set for Hussain to appear in court. If convicted, the former CFO faces a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution for each count of wire fraud and for the conspiracy count.
The charges are the culmination of a multi-year investigation involving the FBI and the US Securities and Exchange Commission.