Hewlett Packard Enterprise has won £920 million compensation from the estate of late entrepreneur Mike Lynch.
Lynch died two years ago in a freak accident while celebrating his acquittal on 15 counts of fraud – avoiding a potential 20 years behind bars – in a San Francisco trial over the 2011 sale of Cambridge firm Autonomy to Hewlett-Packard for $11.1 billion.
However HPE said it would follow through on a potential £3 billion legal claim against his widow Angela Bacares.
London’s High Court said the estate was liable to pay £700m compensation after a 2022 ruling that he duped the US firm into paying £8.2bn for Autonomy. It is also liable for £220m in costs and interest.
Lawyers for Lynch’s estate sought permission to appeal, but that was refused. Estimated to be worth about £500m, the damages could leave it bankrupt. However it can apply directly to the Court of Appeal.
HP said the decision “brings us another step closer to resolution of the dispute”.
Bacares was among 15 people rescued when Lynch’s luxury yacht Bayesian was caught up in a waterspout – a tornado formed over water – while anchored off the coast of Sicily and sank quickly.
The bodies of her husband and their 18-year-old daughter Hannah were among seven recovered in the days following.
A spokesperson for the Lynch family said: “We are disappointed by the court’s refusal and believe an application to the court of appeal should follow in the interests of justice. HP’s $5bn damages claim has already been shown to be vastly exaggerated.
“Today’s judgment describes the exaggeration as ‘without foundation’ and the purposes for which it was ‘calibrated, publicised and pursued’ as objectionable, misleading shareholders and extending the litigation unnecessarily.
“Dr Lynch’s acquittal in the US, where witnesses were properly cross-examined, exposed the truth. The damage to Autonomy was the result of HP’s own actions and failures, not wrongdoing at Autonomy.”
Lynch founded Autonomy in Cambridge in 1996. Its software was designed to extract information from unstructured communications including phone calls, emails and video.
US prosecutors had accused him of inflating its value using backdated sales agreements, hiding its loss-making hardware resale business and intimidating – or paying off – those who spoke out about the practices.
However the jury did not agree with them that Lynch was the “driving force” behind the accounting improprieties.
The former UK government adviser – who also sat on the boards of the BBC and the British Library – was accused of inflating sales and misleading regulators as well as HP, which wrote down the value of Autonomy by $8.8bn soon after the deal went through.
He was extradited to the United States and effectively placed under house arrest while the trial ran its course.
Stephen Chamberlain, former VP of finance at Autonomy, was cleared of the same charges. He died two days before the Bayesian tragedy after he was struck by a car in Cambridgeshire.
In 2022, following a six-year civil case, British High Court judge Mr Justice Hildyard ruled that Lynch and his former finance chief Sushovan Hussain had defrauded HP. Subsequently HPE – HP’s data centre business, which split from the retail arm of the business in 2015 – filed documents earlier this year seeking $4bn (£3bn) in damages.
Before the disaster, Lynch had said he intended to appeal the ruling. Hussain was found guilty of fraud in 2018 and later sentenced to five years in prison.
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