REUTERS - Hewlett-Packard Co’s (HPQ.N) senior executives were aware of certain Autonomy Corp accounting practices months before a whistleblower flagged them, prompting HP to write down the value of Autonomy, the Financial Times reported, citing email records.
Palo Alto, California-based HP has said it was a victim for having paid $11.1 billion to buy Autonomy in 2011. It took a writedown of $8.8 billion in November 2012, accusing Autonomy officials of accounting fraud.
Autonomy’s practice of selling hardware to clients at a loss had been documented by auditors and a report was provided to HP after it bought the British software maker, the FT said.
HP executives were included in communications about Autonomy's hardware sales before the whistleblower brought the transactions to light, the FT said, citing several emails. (link.reuters.com/hev86v)
In an October 2011 email that HP Chief Executive Meg Whitman was copied on, Autonomy cited difficulties it was having in selling HP hardware, the newspaper reported.
However, HP said that while it eventually learned about the hardware sales, it knew nothing of the alleged accounting improprieties until the whistleblower came forward, the FT said.
Autonomy’s former Chief Executive Mike Lynch said in a statement that the emails and documents cited by the FT showed Autonomy had been open with its auditors, Deloitte.
Deloitte told the newspaper it “categorically denies any knowledge of any accounting improprieties or misrepresentations in Autonomy’s financial statements”.
Lynch said: “Meg Whitman accused Autonomy of ‘active concealment’ but these revelations prove we were open and transparent with our auditors who continue to stand by the accounts.”
HP could not be immediately reached for comment by Reuters outside of regular business hours.
Reporting by Varun Aggarwal in Bangalore and Paul Sandle in London; Editing by Supriya Kurane and Mark Potter