"Never trust the British", tweeted American
journalist, Kevin Roose, following the war of words and legal threats that has erupted battle
between two of the biggest figures in the technology world.
Meg Whitman, American former boss of eBay and now CEO of computer
hardware giant, Hewlett Packard (HP), whose share price has halved this year as
it struggles to respond to smartphones and tablets.
Mike Lynch, founder and former CEO of acclaimed British
software company, Autonomy plc, who stands accused of "a wilful
effort" to cook the books to facilitate its $11bn sale last year to HP.
PwC has been called in to investigate; the matter has
been referred to UK and US regulatory authorities. So who's message is winning
out in the media?
That might depend on whether you are following the
American or British media. In the UK, the BBC, FT, Sunday Times and even The
Guardian have sympathised with Lynch who flatly denied the allegations. They
observe that this year, HP has written down $19bn of the $26bn it has spent
buying EDS, Palm, Compaq and Autonomy; fraud couldn't account for writing down
Autonomy by $8.8bn; or such a huge figure remain undetected during an
exhaustive due diligence process by bankers and auditors before the sale.
American media pointed out that analysts and Oracle's
boss, Larry Ellison, had questioned Autonomy's accounting practices and honesty
in the past. The Wall Street Journal committed a front page to detailing some
of Autonomy's alleged scams. The New York Times highlighted how Lynch worked
his engineers "remorselessly hard" and "wouldn't work with
anyone" at HP.
Lynch released to the press a letter he wrote to HP's
board demanding "immediate explanations" for its "highly
damaging allegations" and challenged it to detail them. HP rebuffed him,
stating that it looked forward to hearing Lynch "answer questions under
penalty of perjury" in court. Ouch.
Why have both sides indulged in such a public PR battle?
For Whitman, under investor pressure, she gets to blame her predecessor, take
credit for confronting an issue head-on and create time for a new strategy as
the investigations and any legal processes drag on.
Lynch, instead of hiding behind lawyers, has muddied the
waters and established a narrative about HP while the allegations are so
sketchy. With HP's shares at a decade low, a history of overvauing its
acquisitions, a succession of failed strategies and a new CEO who praised her
predecessor's Autonomy deal, it is easy to argue that HP is the author of its
own misfortune and attempting to distract attention from it.
If Whitman is right, Lynch's reputation is toast and he's
in jail. If she cannot prove a huge, deliberate fraud, she is out of a job. No
wonder it's got so dirty so quick.
Andrew Caesar-Gordon
