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Darktrace executive was part of 'clique' behind Britain's biggest ever fraud

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Nicole Eagan pictured in 2019 - David Paul Morris/Bloomberg
Nicole Eagan pictured in 2019 - David Paul Morris/Bloomberg

A senior executive at the cybersecurity company Darktrace has been named as "part of a clique" behind Britain's biggest ever fraud in a ruling at the High Court.

Nicole Eagan, chief strategy officer at Darktrace, was also investigated by the US Department of Justice for her role in the toxic $11bn (£8.9bn) sale of software business Autonomy a decade ago, Mr Justice Hildyard revealed in a judgment handed down on Tuesday.

Ms Eagan was chief marketing officer at Autonomy when it was sold to Hewlett Packard by the entrepreneur Mike Lynch.

A year later HP wrote down Autonomy’s value by $8.8bn and claimed the selling price for the business had been dramatically over-inflated.

Mr Justice Hildyard found that the central management at Autonomy pulled on accounting "levers" to misrepresent the success of the business.

He went on to list Ms Eagan as "part of a clique responsible with the defendants for the operation of the impugned ‘levers'."

After Autonomy, Ms Eagan went to work as co-chief executive of Darktrace, along with fellow Lynch ally Poppy Gustafsson, until mid-2020.

Ms Egan is now the cyber security company’s chief strategy officer, responsible for its artificial intelligence technology. The business is listed on the FTSE 250 with a value of £2.7bn and is a leading cyber security contractor for the Government.

Mr Justice Hildyard found earlier this year that HP's claims of fraud had "substantially succeeded", and Mr Lynch is fighting extradition to the US on criminal charges. On Tuesday, the judge set out his reasoning in a 1,600-page ruling.

Ms Eagan, together with Autonomy chief operating officer Andy Kanter, abruptly withdrew from testifying in the 2019 High Court case shortly before she was due to be cross-examined.

Ms Eagan was under “continuing investigation by the US DoJ” as recently as January 2021, Mr Justice Hildyard said in the judgment.

Mr Lynch, who set up Darktrace and investment fund Invoke Capital after being dismissed from Autonomy following the buyout, “had to lie” about the listed company’s accounts so he could keep up the fiction it was a successful and growing business immediately before HP bought it, the court ruled.

A Hewlett Packard Enterprise spokeswoman said the firm was "pleased" with the ruling.

Clifford Chance, the lawyers for Mr Lynch, said he was "naturally disappointed with the result and intends to appeal".

Darktrace and Ms Eagan have been approached for comment.

Autonomy was “buying its own revenue” from resellers it had corrupted during the years 2009-2011, the High Court said, fleshing out preliminary findings first made public in January .

Under Dr Lynch and Mr Hussain, Autonomy also presented itself to the market as a “pure play” software company while deliberately concealing revenue-pumping sales of hardware from financial analysts and investors alike.

US prosecutors are trying to extradite Dr Lynch to stand criminal trial in that country, where Mr Hussain is currently serving a five year prison sentence for his part in the scandal. The former chief executive denies wrongdoing.

Ms Eagan's attorney said she had cooperated with the DoJ investigation and provided all needed information for the investigation.

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