A former top executive at Autonomy Corp is seeking to block Hewlett-Packard Co’s settlement of three shareholder lawsuits over its troubled purchase of the British software company, saying HP officials are wrongly absolved of a $8.8 billion writedown.
In a court filing on Monday, a former Autonomy chief financial officer, Sushovan Hussain, said the “collusive and unfair” settlement, if approved by a federal judge, would let HP “forever bury from disclosure the real reason for its 2012 write-down of Autonomy: HP’s own destruction of Autonomy’s success after the acquisition.”
The June 30 accord called for HP shareholders to end efforts to force current and former officials, including Chief Executive Officer Meg Whitman, to pay damages to the Palo Alto, California-based company over its disastrous $11.1 billion Autonomy purchase.
Instead, the shareholders agreed to help HP pursue claims against former Autonomy officials like Hussain and former CEO Michael Lynch, who have denied wrongdoing.
Shareholders would receive nothing for now, while law firms including Cotchett, Pitre & McCarthy and Robbins Geller Rudman & Dowd could share at least $18 million in fees by pursuing those claims, according to court papers.
HP announced the $8.8 billion writedown in November 2012, just over one year after buying Autonomy, and linked more than $5 billion to accounting fraud and inflated financials by Autonomy executives.
“Mr. Hussain’s opposition to the settlement is baseless,” HP spokesman Howard Clabo said. “We strongly believe that at the end of the process, the jury will conclude that Mr. Hussain engaged in a multi-billion dollar fraud.” [eap_ad_2] In his filing, Hussain accused shareholders’ lawyers of doing an “about-face,” having at a September 2013 hearing, downplayed as “immaterial” their failure to target Autonomy executives, but now claiming those same executives were at fault.
“Any normal person would say, ‘Are you kidding me?'” Hussain said. “A federal district judge, who is required to rule on the fairness of the settlement and make sure that it is not collusive, should say, ‘Not in my court.'”
Lynch, the former Autonomy CEO, has not formally opposed the settlement in court, but through a spokesman backed Hussain’s opposition.
“This motion reveals the depth of the corruption that permeates the settlement,” the spokesman said. “The shareholders who have borne the losses get nothing, and learn nothing about what really happened.”
Kelli Alces, a Florida State University law professor specializing in corporate governance, said it was unclear whether Hussain has standing to oppose the settlement.
“It does seem unusual,” she said. “The settlement doesn’t take anything from the former Autonomy CFO, or his ability to defend himself if he is sued by HP later.”