LONDON — Mike Lynch, one of the U.K.’s most notable tech entrepreneurs and a man that has often been referred to as “Britain’s Bill Gates,” is on the brink of being extradited to the U.S. to face criminal charges related to the sale of his firm Autonomy to Hewlett-Packard. Lynch, 56, sold his software start-up Autonomy to HP in 2011 for $11.
7 billion, instantly making him one of the wealthiest and most celebrated tech founders in the U.K. HP’s offer was 64% higher than Autonomy’s market value. The IT giant’s share price on Wall Street collapsed 20% on the day that the deal was announced, while Autonomy’s soared by over 70%. One year later, HP announced an $8.8 billion write-down on the company, claiming that “accounting irregularities” led it to pay too much for Autonomy, which sold data analytics software to businesses.
HP’s main accusation is that Autonomy’s execs inflated the company’s revenues by around $700 million and it sued for $5 billion. Lynch counter-sued, leading to a highly complex legal battle that has been rumbling on for a decade. There are signs, however, that things could be drawing to a close. Crux moment in the legal battle On Friday, U.K. Home Office Minister Priti Patel approved Lynch’s extradition to the U.S. Earlier that day, a British judge ruled in favor of HP in a civil case against Lynch over claims he plotted to inflate the value of Autonomy before it was bought by HP. HP won the majority of the charges, Justice Robert Hildyard said, though the damages would be significantly lower than the $5 billion sought by the company.
Lynch wouldn’t be the first Autonomy employee to be charged in the U.S. In May 2019, former CFO Sushovan Hussain was charged with fraud and jailed for five years. A spokesperson for HP told CNBC Monday that the company is happy with the judge’s ruling. “Dr. Lynch and Mr. Hussain defrauded and deliberately misled the market and Hewlett-Packard,” they said. “HPE is pleased that the judge has held them accountable.” Lynch’s lawyers did not immediately respond to a CNBC request for comment but they are reportedly planning to appeal the rulings and the process could take 12 months, according to legal experts. If his appeal is unsuccessful then he could face a 20-year prison sentence. Some in the U.K. tech industry including Lastminute.com co-founder Brent Hoberman don’t believe Lynch should be extradited. “Is it the right thing that a U.K.
businessman operating under U.K. laws is extradited to the U.S.? I don’t believe it is, and I don’t think other business people will think so either,” Hoberman told The Sunday Times newspaper. Hoberman, who asked Lynch to speak at his Founders Forum event last summer, described the Autonomy founder as “an iconic figure for U.K. tech,” according to the newspaper report. After writing off three quarters of Autonomy’s value, HP sold what was left of the company to British firm Micro Focus in September 2016 as part of an $8.8 billion deal that involved other HP business units. “It’s a sad thing that happened in the end,” Lynch said at a tech conference in 2016. “The U.K. model is there’s no way of stopping a takeover. So when Hewlett Packard came along and wanted to make its offer, we couldn’t stop them.” He added:
“The problem was the week after the deal they [HP’s leaders] get fired and we’re left with a hardware group that used to call us the step-child. All the understanding of clever, high growth, software people wasn’t there.” The U.S. is also trying to extradite WikiLeaks founder Julian Assange from the U.K. Assange is wanted by U.S. authorities over the publication of hundreds of thousands of classified military documents and diplomatic cables in 2010 and 2011. They say his actions put lives in danger and they accuse him of 18 counts, meaning he faces a 175-year prison sentence. Earlier this month, Assange won the right to take his extradition case to the U.K.’s top court.