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Who is Mike Lynch and why is he facing extradition to the US?

·3-min read
Who is Mike Lynch and why is he facing extradition to the US?
Who is Mike Lynch and why is he facing extradition to the US?

Mike Lynch, the founder of software company Autonomy, has fought a lengthy legal battle to avoid being extradited to the US to face fraud charges.

The case centres on the sale of the former FTSE 100 company to Hewlett-Packard (HP) for $11bn (£8bn) in 2011.

On Friday, Priti Patel is due to decide on whether Mr Lynch should be brought before US prosecutors.

What allegations does Mike Lynch face?

In 2015 the tech billionaire, 56, was sued by HP in a civil case in the High Court in London, while the US government filed criminal charges against him in 2018 and 2019.

On Friday, Mr Lynch lost the civil fraud case, in which he denied claims that he fraudulently inflated the value of Autonomy before its sale to HP. The company has claimed damages of more than $5bn from Mr Lynch and his former finance chief, Sushovan Hussain, who deny the allegations.

The High Court has not yet declared an amount that should be paid.

Mr Justice Hildyard said Mr Lynch and Mr Hussain had misled Autonomy’s audit committee and Deloitte, its auditors, by disguising “fire sale” hardware deals as software at the end of financial quarters to meet sales targets.

If found guilty in the US, where he faces 17 counts of fraud in the Department of Justice’s case, Mr Lynch could face a decades-long prison term. Mr Hussain is serving a five-year prison sentence.

Why is there a row over Mike Lynch’s extradition?

Priti Patel, the Home Secretary, must decide on Friday whether to permit Mr Lynch’s extradition. His legal team had asked for her decision to be delayed until the outcome of the civil case against him was made public.

A district judge in Westminster Magistrates’ Court last summer rejected a bid by Mr Lynch’s lawyers to stop extradition proceedings, agreeing he should be removed and referring the matter to Ms Patel.

The judge said that Ms Patel should make a decision by Christmas, prompting the tech entrepreneur to launch a High Court challenge seeking to move the deadline until March.

However, on Wednesday judge Jonathan Swift in the High Court rejected this latest application from Mr Lynch, ruling that the UK cannot delay until the civil case is decided, meaning a decision on his extradition must be made imminently.

Ms Patel is due to decide on Friday, although if she approves extradition, Mr Lynch is likely to appeal.

What happened with Autonomy’s sale?

Autonomy was founded by Mr Lynch in 1996 and developed software that could extract data from "unstructured" sources such as phone calls, emails or video and and interpret it, for example by suggesting answers to call-centre operators.

HP bought Autonomy in 2011 but a year later slashed its value by $8.8bn, saying it had uncovered serious accounting improprieties.

Both HP and US prosecutors have alleged that artificial inflation of Autonomy’s sales and profits between 2009 and 2011 meant the British company was overvalued.

In turn, Mr Lynch has claimed that HP mismanaged Autonomy after buying it.

The UK's Serious Fraud Office (SFO) opened an investigation into the deal in 2013 but dropped the case two years later because of "insufficient evidence".

Mr Hussain was sentenced to five years in prison in 2019 after being found guilty of 16 counts of securities and wire fraud in the US, linked to the sale of the firm to HP.

In 2017, HP sold Autonomy as part of a wider deal to Micro Focus, another British software company which merged it.

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