As reported in The Financial Times:
British software entrepreneur Mike Lynch has submitted himself for arrest as part of his US extradition over allegations of conspiracy and fraud stemming from the $11bn sale of Autonomy to Hewlett-Packard in 2011.
Mr Lynch handed himself in to Charing Cross police station in Central London on Wednesday. He called his arrest “a formality” and said he would fight the extradition request, which comes as he awaits the outcome of a $5bn civil fraud trial in London’s High Court.
Mr Lynch was bailed on Wednesday after appearing at Westminster magistrates court but must lodge £10m security with the court as well as abide by other bail conditions, including surrendering travel documents. No date has yet been set for his extradition hearing.
The 10-month trial was brought by Hewlett Packard Enterprise, which accused him and former colleague Sushovan Hussain of manipulating Autonomy’s accounts and causing the computing group to pay $5bn too much for the company.
Mr Lynch finished testifying in July after a heated trial in which HPE accused him of telling “lie after lie” and Mr Lynch accused HPE’s board of experiencing “buyer’s remorse” and of engaging in a “witch-hunt”.
The verdict has not yet been handed down and Mr Lynch now faces extradition to the US to face 14 charges including wire fraud and conspiracy that could result in up to 20 years in prison if he is convicted.
The businessman was charged with wire fraud and conspiracy in the US two years ago over allegations that he was involved in a plan to inflate Autonomy’s performance before the company was acquired by HP, and fresh counts were added to the indictment in February last year.
In January former Brexit Secretary David Davis MP urged the government to delay the extradition of Mr Lynch until the conclusion of the UK trial. On Twitter the politician argued the UK needed to “rebalance our extradition treaty with the US”.
A San Francisco Court confirmed the US extradition request in November, leaving Mr Lynch facing the decision of whether to fight the order in the UK or comply.
Lawyers for Mr Lynch said the US request was “yet another example of the DOJ’s attempts to exert extraterritorial jurisdiction over non-US conduct” on Wednesday.
In a statement they said Mr Lynch “steadfastly denied” the allegations brought by HP seven years ago and added: “Dr Lynch has now answered HP’s claims in the appropriate forum, the High Court in London, where he attended court every day of the 10-month trial.
“During that trial, Dr Lynch testified about all of these allegations for more than 20 days. He has not hidden, nor has he shied away from defending his conduct. Having patiently and diligently defended the case in England for several years, he awaits the civil trial judgement.”
The HP/ Autonomy deal was also probed by the UK’s Serious Fraud Office in 2013, which examined alleged “accounting misrepresentations” at the UK software group. However the case was dropped in 2015 after the agency concluded there was “insufficient evidence” to bring it.
Anthony Hanratty, senior associate at law firm BCLP, said the request would “do nothing” to restore the confidence in the extradition treaty between the UK and US.
“Less than two weeks after showing scant regard for the treaty, by refusing to accept an extradition request for Anne Sacoolas, the US are now seeking the extradition of a UK national in circumstances where the UK authorities have already decided there is insufficient evidence to bring charges. Whatever happens next with this extradition request, there will no doubt be further calls for the approach to UK/US extradition to be re-examined,” he said.
As reported in The Guardian:
Mike Lynch, in his heyday as the UK’s software supremo, was a prickly character whose run-ins with City analysts were legendary. That may help to explain why the UK business establishment does not seem interested in the cry from his lawyers that the US Department of Justice is engaged in territorial overreach in trying to haul the founder of Autonomy to the US to stand trial.
But the UK business world should be alarmed. The DoJ looks to be deploying strongarm tactics and Lynch’s lawyers are right to shout about the wider business implications. Here’s one central question: should the fallout from the takeover of a UK company, conducted under UK takeover rules, really end up in a US court?
Lynch was the founder of a UK company quoted on the London Stock Exchange. Allegations of improper accounting in the $11bn sale of Autonomy to Hewlett-Packard in 2011 were investigated by the UK Serious Fraud Office, which decided there was insufficient evidence to bring charges, and Lynch has always denied any wrongdoing. Yet the DoJ wants to bring charges of fraud and conspiracy against Lynch relating to the deal.
Lynch submitted to arrest in London on Wednesday as part of the US extradition proceedings but will fight the request under “forum bar” provisions, which allow a UK court to block an extradition if it deems the majority of alleged criminality took place in the UK.
That hearing lies ahead but, in the meantime, we are awaiting a big development: judgement in the £3.8bn civil fraud trial brought against Lynch in London by Hewlett-Packard, which claims Autonomy’s value was artificially inflated before the sale. The US company ended up writing down its purchase by $8.8bn.
The high court’s verdict is critical to the wider issues. It is conceivable that Hewlett-Packard could fail to win its civil case, where the balance of probabilities is the threshold, and yet Lynch could still be sent to the US to face criminal charges with a higher burden of proof. If that were to happen, the process would look grossly unfair.
David Davis, the former Brexit secretary and longstanding critic of UK-US extradition arrangements, has called the DoJ’s timing “extraordinarily inappropriate”. Fair comment: if the roles were reversed, does anyone seriously think the UK would able to summon a high-profile US executive in these circumstances?
As reported on LBC Radio:
Mike Lynch has been arrested this morning, Why?
His legal team are keen to stress that this is a formality in that he submitted himself for arrest. Nevertheless had he chose not to do so sure they would have found a way to arrest him anyway. It’s a very dramatic story, it dates back to his sale of Autonomy to HP. HP discovered that Autonomy wasn’t quite in as good a nick as they thought it was and they are trying to sue Dr Lynch, the UK based billionaire entrepreneur. He said this is a buyer’s remorse and you need to look into it properly, they say he inflated prices. This is a long-running trial in the UK civil courts here, and were awaiting judgement. Ahead of which perhaps, and in line with that, the US are seeking to extradite Mr. Lynch. There are lots of opponents to this, not least David Davis and Mr. Lynch’s MP Greg Hands. So that extradition appeal is going to be challenged. It is a very diplomatic situation of course the argument is let’s wait and see what the British courts determine but it’s a pretty dramatic development.