British firm founded by ex-government aide ‘cooked the books ahead of US sale’

Ryan Hooper, PA Chief Reporter

An English technology company founded by a former government adviser “cooked its books” before being sold to the US, a court heard.

Michael Lynch is accused of being involved in a multibillion-dollar fraud in America over the sale of his software company, Autonomy, to Hewlett-Packard (HP) in 2011 for 11 billion dollars (£8.5 billion), which resulted in “colossal financial losses” for the US firm.

US authorities claim he deliberately overstated the value of his business, which specialised in software to sort through large data sets.

Michael Lynch court case
British tech tycoon Michael Lynch arrives at Westminster Magistrates’ Court, where he is fighting extradition to the US (Kirsty O’Connor/PA)

Mr Lynch, 55, denies any criminal wrongdoing, and is fighting extradition to the US.

Mark Summers, outlining the case for the American government to secure Mr Lynch’s extradition, told Westminster Magistrates’ Court: “This case is straightforward, even taking the most binary, defence-friendly analysis.

“This was an English company, cooking its books in England, making it appear what it wasn’t, and then persuading an American company to grossly overpay for it, based on those cooked books.

“The only unusual feature of this case was the titanic scale of the money involved.”

He added that “the most basic school child maths” suggested HP had been deceived of “at least 1.7 billion dollars” in overpayment.

Mr Summers also disputed the concern raised by Mr Lynch’s defence team that extraditing their client would send a worrying message to English company bosses that they might be tried outside the UK for any alleged wrongdoing.

Mr Summers said: “English CEOs (chief executives) have no expectation of local justice when they train and target their fraudulent guns on American companies and American money.”

Alex Bailin QC, representing father-of-two Mr Lynch, a former scientific adviser to the UK Government, from Chelsea in south-west London, said any criminal case ought to be heard in England.

He said: “The US is not the global marshal of the corporate world.

“We say this case belongs here in Britain. It concerns events, the majority of which involved the UK, it involved a British citizen (Mr Lynch) with strong lifelong links to the UK.”

He added: “Mr Lynch vehemently denies he was involved in any form of accounting wrongdoing, or fraud, or conspiracy or cover-up.

“But it ought to be examined by the English courts.”

Mr Lynch faces 17 criminal charges in the US including wire fraud, securities fraud and conspiracy to defraud.

Supporters say he faces a decade in prison in the US if convicted.

HP is seeking damages of 5 billion dollars (£3.8 billion) from Lynch in a separate civil case in London’s High Court.

Mr Lynch claims any loss was down to the tech giant’s mismanagement of the acquisition.

Former Brexit secretary David Davis, who has previously supported Mr Lynch’s bid not to be extradited, sat in the public gallery for the defence opening statement on Tuesday morning.

The extradition hearing is expected to last all week, with judgment reserved to a later date.

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