SFO investigates HP subsidiary Autonomy

HP has confirmed that the Serious Fraud Office (SFO) is investigating Autonomy, the Cambridge-based software business it acquired in August 2011 for $11.1bn (7.5bn).

The ill-fated acquisition was later subject to an $8.8bn writedown by HP amid claims that it was duped into overpaying for Autonomy, which it has accused of sharp accounting practices.

HP chief executive Meg Whitman told analysts at the time that a forensic review of Autonomy's accounting practices conducted post-acquisition had led to the discovery of "serious accounting improprieties, misrepresentation and disclosure failures".

She added: "Autonomy was substantially overvalued at the time of its acquisition due to the misstatement of Autonomy’s financial performance, including its revenue, core growth rate and gross margins, and the misrepresentation of its business mix."

HP reported its findings to the US Securities and Exchange Commission (SEC) and SFO late last year and was informed on 6 February that the SFO had opened an investigation into HP's allegations, which have been denied by Autonomy's former management.

The SEC and the UK accounting watchdog Financial Reporting Council (FRC) are both also investigating the allegations.

The furore is expected to dominate HP's annual shareholder meeting in California this week and has led to calls for HP chairman Ray Lane and other board members to resign.