A new shareholder lawsuit over Hewlett-Packard’s acquisition of British software firm Autonomy has named Big Four audit firms KPMG & Deloitte as defendants, alleging they missed numerous red flags about Autonomy’s accounting.
The lawsuit, filed on Tuesday in federal court in San Jose, California, also named HP’s board of directors, officers, and former executives, alleging breach of duty and negligence for their role in HP’s acquisition Autonomy.
HP has contacted the SEC’s enforcement division and the UK’s Serious Fraud Office.HP has requested that both agencies open criminal and civil investigations into this matter. In addition, HP intends to seek redress against various parties in the appropriate civil courts to recoup what we can for our shareholders”.
The company spent about $10.2 billion to acquire Autonomy, with the write-down putting the investment — or burden on shareholders, if you will — at $16 billion.
But who should be held accountable? During today’s conference call, Benjamin Reitzes, Barclays Capital analyst, asks: “Who are you holding accountable internally?”
“The CEO at the time and the head of strategy who led this deal are both gone, Léo and Shane Robison”, Whitman answers. “Most of the board was here and voted for this deal, and we feel terribly about that. What I will say is the board relied on audited financials, audited by Deloitte, not brand x accounting firm but Deloitte. And by the way, during our very extensive due diligence process, we hired KPMG to audit Deloitte, and neither of them saw what we now see after someone came forward to point us in the right direction