Lynch Says HP’s Meg Whitman Couldn’t Cope With ‘All The Fires’

(Bloomberg) -- The clash between the heads of Autonomy and Hewlett-Packard Co. was laid bare as Mike Lynch told a court that HP’s Meg Whitman was "out of her depth" and botched the integration of the $11 billion deal.

Kicking of his defense in the mammoth Autonomy fraud trial, the former Autonomy chief executive officer said incoming HP CEO Meg Whitman "could not cope with all the fires" after she took over the computing giant at the end of 2011.

HP has accused Lynch of being the architect of a massive accounting fraud that caused it to overpay for Autonomy, once the U.K.’s second-biggest software company. But, he said, it was HP that ran his firm into the ground. The frustrations between the two executives began almost as soon as the deal closed, he said, when Whitman told Lynch that the FTSE 100 company was just a start-up and needed "to grow up."

Autonomy staff were demoralized at the "craziness, infighting and politics," Lynch said in a court filing. “The regime change without handover led to paralysis, flip flopping of agreed decisions and abandonment of the whole plan."

It’s Lynch’s first opportunity to rebut weeks of testimony against him in the trial, which started in March. He’s set to give evidence until the end of July -- a period of questioning that the judge overseeing the case called “unparalleled."

The most memorable moment of the day came right at the end when HP’s lawyer Laurence Rabinowitz accused Lynch of misleading market investors.

"We’ll come to see through the course of this cross examination that this is exactly what happened," he said.

Autonomy was "one of the most successful companies that England has ever produced," Lynch said.

HP took an $8.8 billion write-down on the Autonomy assets less than a year after buying the British software firm. HP says that Lynch and his deputy Sushovan Hussain artificially inflated revenue -- typically at the end of the financial quarter -- to meet or beat stock market expectations.

"The commercial decisions HP challenges were, from my perspective as CEO, legitimate business judgments for Autonomy’s employees to have made at the time," Lynch said.

In his filing, Lynch addressed a key plank of HP’s allegation that he was a hands-on CEO who was aware of the improper practices at Autonomy. On the first day of the trial in London, HP had cited an email from Lynch to his senior management team about a contract with the U.S. Department of Veteran Affairs. He said: "If there is any problem I WANT TO KNOW ABOUT IT IN A F---ING MILLISECOND from all of you."

Lynch said in his filing that he was unusually aggressive and abrupt in the email.

He said: "My usual email style is short and direct. I do not often lose my temper, but here I was plainly angry."

To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser, Giles Turner

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