The UK’s Serious Fraud Office (SFO) has today (19 January) announced it has closed its high profile investigation into the $11bn sale of British software firm Autonomy to US computer giant Hewlett-Packard in 2011 due to lack of evidence, a move that brings some closure for Autonomy founder and Clifford Chance client Mike Lynch.
The instruction to represent Autonomy founder and tech entrepreneur Mike Lynch was gifted to Clifford Chance in 2012, following accusations that Autonomy had committed a series of abuses that forced HP to write down $8.8bn from its takeover. The cross-border mandate saw CC’s litigation and disputes head Jeremy Sandelson advise Lynch alongside fellow disputes partner Iain Roxborough in London, while partner Chris Morvillo also advised from New York.
HP claimed it was misled by Autonomy as to its true value and published the allegations following an internal investigation overseen by executive vice-president and general counsel John Schultz.
Having commenced the investigation in 2013, the SFO said in a statement this morning: ‘In respect of some aspects of the allegations, the SFO has concluded that, on the information available to it, there is insufficient evidence for a realistic prospect of conviction.’
It added, however, that in respect of other aspects and ‘on the application of well-established principles’, jurisdiction over the investigation has been ceded to US authorities whose investigation is ongoing. The body did not provide information on the reasons for its decision ‘in order not to undermine the US-based investigation’.
Lynch and the former management team responded in a statement, saying: ‘We welcome the SFO’s decision to close its investigation. As we have always said, HP’s allegations are false, and we are pleased that after a two-year review of the material presented by HP, the SFO has concluded that there is not a case to pursue.’
‘Let’s remember, HP made allegations of a $5 billion dollar fraud, and presented the case in public as a slam dunk. HP now faces serious questions of its own about its conduct in this case and the false statements it has made’
A HP spokesperson commented: ‘As the SFO made clear, the US authorities are continuing their investigation and we continue to cooperate with their investigation. HP remains committed to holding the architects of the Autonomy fraud accountable.’
It constitutes another knock for the UK watchdog, which has endured a chaotic two years including the collapse of the prosecution of British-Canadian businessman Victor Dahdaleh following a six-year inquiry by investigators; and the £300m lawsuit taken against it by property tycoons Vincent and Robert Tchenguiz over claims the agency made serious mistakes in its investigation of their role in the collapse of Icelandic bank Kaupthing, of which they were executives.
Clifford Chance, meanwhile, has been instructed on multiple heavyweight investigations in recent years. Litigation and disputes head Sandelson has previously advised media mogul James Murdoch and News International in relation to the Culture, Media and Sport Committee inquiry into phone hacking and in relation to the Leveson inquiry into the culture, practices and ethics of the Press.
The firm is also currently acting for Barclays in the ongoing Forex investigation undertaken by the Financial Conduct Authority (FCA) and for the FCA itself when commercial litigation partner Simon Davis was tasked with conducting an independent inquiry into handling of the body’s botched announcement of an investigation into the insurance industry last year, causing £3bn to be wiped off share values.
sarah.downey@legalease.co.uk
For more on the SFO, see: ‘A step backwards: Home Secretary weighs in on SFO’s future with proposal to abolish’