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Autonomy Sale to be probed by Justice Department

The Hewlett Packard acquisition of Autonomy a United Kingdom company will be investigated by the Department of Justice in the U.S. HP said in one of their regulatory filings that the Justice Department informed them last month it had opened a probe into the purchase of Autonomy.

The software company purchased by HP in 2011 however, HP said this year that it seemed the UK company had inflated its worth, which lead them to make a write off of $5 billion.

HP said in November that it had to write off $8.8 billon of the total $11.1 billion it had originally paid to acquire Autonomy. HP said that $5 billion of the write down was due tied to serious improprieties in the accounting, disclosure failures and misrepresentation.

HP asked authorities in both the U.S. and UK to investigate the alleged misrepresentations of finance for Autonomy prior to the takeover by HP last year.

HP said it provided information to the Securities in Exchange Commission, the Department of Justice and UK’s Serious Fraud Office that related to disclosure failures, improprieties and misrepresentations at the UK firm that occurred before and in connection with the acquisition of Autonomy by HP.

HP was advised by the Justice Department on November 21 that it had opened an investigation that related to Autonomy. The company said it was cooperating with all three agencies involved in investigating Autonomy. Mike Lynch, the former chief of Autonomy, who happens to also be a BBC non-executive director, rejected the claims made by HP that Autonomy management prior to the acquisition by HP had misled HP as to the value of the company. Lynch said the allegations both appalled and shocked him.

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