Confirmed: Deloitte Cooperated with the DOJ on HPE Autonomy Case
April 22, 2021
The ghost of Arthur Andersen appeared I think.
Now we know why HPE (formerly HP) stopped making noise about suing auditing firm Deloitte for its role in the decision to buy Autonomy in 2011, which HPE famously came to regret. Forced to write down Autonomy’s value by $8.8 billion in 2012, HPE claimed the software firm and auditors at Deloitte had misrepresented its value. There were questions of whether HPE did its own due diligence before making its purchase, but the firm proceeded to take those it blamed to court. Autonomy’s CFO Sushovan Hussain was sentenced to five years in jail in 2019, and the case against CEO Mike Lynch is (oh so slowly) proceeding. Now The Register reveals, “Deloitte Settled HPE’s Autonomy Lawsuit for $45m Back in 2016 and Agreed to Cooperate with US DOJ.” Writer Gareth Corfield tells us:
“The amount of the settlement is less than 1 per cent of the $5bn for which HPE is pursuing Lynch and Hussain. Although HPE and Deloitte signed a confidentiality agreement over the $45m, its main details were hiding in plain sight inside the last ever accounts filed by Autonomy Corporation Ltd (ACL) before it was merged away into HPE’s corporate structure, becoming known as ACL Netherlands BV. A letter previously sent by HPE’s lawyers to Deloitte in 2014 alleged ‘there is evidence that Deloitte was complicit in aspects of the misstatements in Autonomy’s published information’. That allegation would never be tested in court, though Britain’s accounting regulator eventually found it proven. Public knowledge of the settlement sum also sheds light on why Deloitte was never a co-defendant with Lynch and Hussain in the High Court, despite the auditor being an obvious target for HPE following allegations of false accounting at Autonomy.”
When HPE filed its suit against Lynch and Hussain in 2015, it left open the option to include Deloitte but mysteriously withdrew that potential the next year. Now Corfield confirms that, as suspected, those at Deloitte who had worked on the account signed an agreement to cooperate with the Department of Justice. It specified that Deloitte admitted no wrongdoing or liability, and the firm granted HPE’s lawyers complete access to its Autonomy audit papers and emails. It is suspected that the court would have ruled against Deloitte had it not cooperated, and that by doing so the firm avoided damage to its reputation. Perhaps. But consider—whom do you want as your tax advisor?
Cynthia Murrell, April 22, 2021
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