Autonomy struck ‘handshake deals’ with customers to boost revenue, Mike Lynch trial hears
The British tech company Autonomy struck a series of “handshake deals” that involved paying customers to buy its software, a jury in a US fraud trial against the company’s founder Mike Lynch has heard.
John Baiocco, an executive at the software company Capax, told a court in San Francisco that Autonomy agreed around 10 deals, worth millions of dollars, which involved the company paying its customers to buy its software.
Mr Lynch and Autonomy’s former finance director, Stephen Chamberlain, are on trial on fraud charges over the £7bn sale of Autonomy to the Silicon Valley giant Hewlett Packard in 2011.
US prosecutors have claimed executives at Autonomy inflated the company’s value with illegal accounting, charges that Mr Lynch and Mr Chamberlain deny.
Mr Baiocco said on Thursday that Autonomy had offered to “fund” Capax buying its technology, calling it a “handshake deal”.
He said that Autonomy would pay Capax for unspecified “services” it did not provide and that Capax would then pay the British company “pretty much the next day”.
US prosecutors claim Autonomy used deals such as this to boost its revenue and its supposed value ahead of its sale. HP wrote off most of Autonomy’s value a year after buying the company, blaming accounting irregularities, while Mr Lynch has claimed the US company destroyed value by mismanaging the business.
Chris Morvillo, a lawyer for Mr Lynch, said Mr Baiocco had not mentioned Mr Lynch in his testimony. Mr Baiocco said that he had met Mr Lynch “maybe once or twice”.
Earlier this week, Gary Lincenberg, a lawyer for Mr Chamberlain, said that an agreement between Mr Baiocco and former Autonomy executive Christopher Egan had been “concealed” from Mr Chamberlain.
“Egan and Baiocco are not telling Mr. Chamberlain of their oral side conversations,” Mr Lincenberg said. “And it’s concealed, by the way, not just from Steve Chamberlain, it’s concealed from the whole finance team in Cambridge.”
He added that Mr Baiocco had said he was getting “harassed” by Mr Chamberlain for funds. “Why would Chamberlain be harassing him if he knew they didn’t really have to pay this money?” he said.
The trial is set to continue on Monday.
Recommended
Epstein's defender goes to war to keep 'Britain's Bill Gates' out of prison
