Priti Patel, UK home secretary, has ordered the extradition of Mike Lynch, the billionaire founder of software maker Autonomy, to face a criminal trial in the US.
The move came just hours after Lynch lost a high-profile civil lawsuit brought by Hewlett Packard Enterprise following its $11bn takeover of the UK tech company more than a decade ago.
The Home Office confirmed that Lynch’s removal to the US had been ordered late on Friday. He faces 14 counts of conspiracy and fraud there related to the Autonomy deal.
Lynch vowed on Friday to lodge an appeal against Patel’s decision and continue his fight against US extradition, a process which could take years.
Lynch and Sushovan Hussain, Autonomy’s former chief financial officer, were sued by HPE for allegedly manipulating the software group’s accounts, leading the Silicon Valley company to pay an extra $5bn when it acquired Autonomy in 2011.
Mr Justice Robert Hildyard ruled on Friday that HPE had “substantially succeeded” in its claim against Lynch although the amount of damages would be “considerably less” than the $5bn HPE had claimed. Lynch and Hussain both denied the allegations and any wrongdoing during the nine-month trial. Hildyard will hand down his full ruling at a later stage.
The conclusions reached by Hildyard are significant because the civil lawsuit in London covered the same allegations and heard from some of the same witnesses due to testify in the US criminal trial. The judge’s conclusions were handed down on Friday morning meaning that Patel had time to take them into consideration when making her decision.
Patel’s decision now means that Lynch must lodge an extradition appeal within days, effectively kick-starting a lengthy legal process.
Chris Morvillo, the lawyer at Clifford Chance representing Lynch, said his client firmly denied the US criminal charges and would battle on: “He is a British citizen who ran a British company in Britain subject to British laws and rules and that is where the matter should be resolved.”
Hildyard’s judgment came two years after the High Court trial ended and was delayed because of the unusual complexity of the case, one of the UK’s biggest civil fraud trials.
The judge read a summary of his conclusions to a High Court hearing on Friday. He found that a hardware reselling programme by Autonomy was there to cover shortfalls in software revenue, that it was “dishonest” and that the defendants were “well aware of this”.
These “lossmaking transactions were not commercially justified on any basis”, the judge said of the hardware reselling programme. They were concealed because their revelation would have revealed that Autonomy’s software business was not generating the accelerating profits “which heavily influenced its price”.
He found that HPE relied on what was said about Autonomy’s revenue in the accounting material and was induced to pay $11bn for Autonomy.
Lynch and Hussain were aware of Autonomy’s sales to value added resellers (VAR) that were intended to make up shortfalls in the software business. Autonomy’s accountants, Deloitte, “did not see the full picture”, the judge added.
In the High Court trial, HPE accused Lynch of telling “lie after lie” and of being “unreliable” in the witness box. During the court hearings, Lynch accused HPE of bringing the lawsuit because its board had suffered “buyer’s remorse”. Meg Whitman, HP’s chief executive at the time of the deal, saw Autonomy as a “headache” because the company was “floundering and she was firefighting on many fronts”, he claimed.
HPE lodged the lawsuit after its decision to take an $8bn impairment charge on the deal in November 2012, which it blamed on “improprieties” by the Autonomy team.
In September 2020, a ruling by the Financial Reporting Council ordered Deloitte to pay a record £15m fine, plus legal costs of £5.6m, for serious misconduct over its audit of Autonomy.
HPE said in a statement on Friday: “Dr Lynch and Hussain defrauded and deliberately misled the market and Hewlett-Packard. HPE is pleased the judge has held them accountable.”
Kelwin Nicholls, a lawyer at Clifford Chance representing Lynch, said in a statement that the High Court decision was “disappointing” and that Lynch planned to file an appeal.