Mike Lynch to be extradited to US after losing Autonomy fraud case

Tycoon faces criminal charges over $11bn deal to sell Autonomy to Hewlett Packard

Ben Keith in The Times on 29 January 2022

Mike Lynch has lost a multimillion-pound civil fraud claim brought by Hewlett Packard over the American company’s 2011 deal to buy the British tycoon’s software business.

In a damning judgment at the High Court in London, Mr Justice Hildyard said that Lynch and his chief financial officer had fraudently inflated Autonomy’s revenue “to meet market expectations”.

The decision cleared the way for Lynch’s extradition to the United States to face criminal charges including securities fraud related to the $11 billion deal to sell Autonomy to Hewlett Packard. Just hours after the judgment was delivered Priti Patel, the home secretary, ordered his extradition.

A Home Office spokesman said that “following consideration by the courts, the extradition of Dr Michael Lynch to the US was ordered”.

Chris Morvillo, of Clifford Chance, Lynch’s lawyer, said that his client denied the charges that had been levelled against him in the US and would appeal against the extradition decision.

He added: “He is a British citizen who ran a British company in Britain subject to British laws and rules and that is where the matter should be resolved.”

The judge said that Lynch’s actions had resulted in “misleading the market as to the true market position of Autonomy” and that “loss-making transactions” arranged by Lynch “were not commerdcially justified on any basis”.

While the judge said that he reached the “clear conclusion” that Lynch was liable for civil fraud, he added that damages awarded to Hewlett Packard would ultimately be considerably less than the $5 billion claimed.

After the ruling, Hewlett Packard said that Lynch and Sushovan Hussain, the former chief financial officer at Autonomy, had “defrauded and deliberately misled the market and Hewlett-Packard”. The company added that it was “pleased that the judge has held them accountable”.

A spokesman for Lynch described the High Court ruling as “disappointing” and said that the he “intends to appeal”.

The spokesman added: “We will study the full judgment over the coming weeks. We note the judge’s concerns over the reliability of some of Hewlett Packard’s witnesses. We also note the judge’s expectation that any loss suffered by HP will be substantially less than the $5 billion claimed.”

The ruling came as Priti Patel, the home secretary, was set to decide by midnight today whether to grant a request brought by the US authorities to extradite Lynch so that he can face fraud charges there.

On Wednesday, another High Court judge rejected attempts to allow Patel more time to decide whether the 56-year-old should be extradited to the US.

Specialist extradition lawyers predicted that today’s High Court ruling would move Lynch a step closer to being sent to stand trial in the US.

“Mike Lynch has gambled and lost,” Ben Keith, a barrister at Five St Andrew’s Hill Chambers in London, said.

Keith added that Lynch “fought the UK civil case in part to show the criminal case in the US was wrongly brought in the hope the UK court might take a different view to the US prosecutors. That has not happened so the impact on the extradition proceedings is likely to be minimal”.

Thomas Garner, a partner at the City law firm Fladgate, described the ruling as a “double blow” for Lynch “given the weight he has sought to place on those proceedings in his extradition defence”.

Garner said that even if the home secretary authorises extradition, her move “would just mark the start of the next phase of his struggle to stay in the UK”.

Lynch’s legal team has been clear that he will seek to appeal, a process that would take several months to resolve.

“Meanwhile, [Lynch’s lawyers] will be combing through the judgment for any findings that might assist their cause notwithstanding the overall verdict,” Garner added.

This article was first published in The Times on 29 January 2022 and can be accessed in full here.