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By | Paul Kunert 19th May 2015 11:37

Vatican 'ghost account' claims as reseller wades into Autonomy-HP legal struggle

SME says Whitman must pay up after Pontiff and Lynch walk

MicroTechnologies, a reseller caught up in the long running HP/Autonomy legal battle, has itself fired a legal salvo at the US behemoth. MicroTech claims it is owed millions of dollars for software that was paid for but never delivered.

MicroTech was named in HP’s claims against former Autonomy CEO Mike Lynch, saying that he created bogus contracts to inflate Autonomy's sale price - but the assertion of Microtech's new suit is that the reseller did nothing wrong itself.

In a lawsuit filed in San Francisco, the tech dealer claims it paid Autonomy $16.5m for end-user deals struck with the Vatican and HP in 2010 and 2011 respectively - prior to HP's acquisition of Autonomy - but didn’t receive the licenses or a full refund.

HP then splashed $11bn on Autonomy in August 2011 and subsequently claimed that Lynch had cooked his books, naming the Vatican account as one of the ghost contracts.

In a press conference stateside yesterday, Lanny Davis, a Washington-based attorney who was once special counsel to Bill Clinton and now represents MicroTech, said:

“Regardless of whether HP was defrauded by Autonomy, or whether HP’s over-payment for Autonomy was a product of a possible due diligence failure, in my opinion, HP is not entitled to keep both MicroTech’s money and Autonomy’s software that MicroTech duly purchased.”

In the first transaction in 2010, MicroTech issued a $11.5m purchase order to Autonomy for software to be used in the Vatican Library’s manuscript archiving project, and paid the company $9.22m of this. MicroTech said it did not pay the balance after issues arose with deal and it became clear the agreement was not going to close on the date agreed.

Fast forward to March 2014, and the reseller learned the Vatican library had contracted with NTT Coms to digitise the archive, yet to date the firm has yet to get either the cash returned or the license keys to activate the software.

In the second transaction in July 2011, “Autonomy again misrepresented” to MicroTech that it had an agreement in place to provide software to customer HP, the reseller alleges. It issued a purchase order for $7.35m and paid this in full on 16 August, just days before HP bought Autonomy. But again the HP software resale agreement didn’t close.

“just because HP is a big company with billions in revenues doesn’t mean it can bully a small business owned by a veteran into not demanding our money back for something never delivered,” said Tony Jiminez, chairman and CEO at MicroTech.

“HP may think because they are so big they don’t need to negotiate a reasonable and fair solution,” he added, “well, they will someday realise they were wrong, we are confident a court will agree, the money or the software - you can’t keep both - under the law and principles of fairness”.

The UK Serious Fraud Office ended its investigation into claims of fraud against Lynch in January claiming there was insufficient evidence, but a separate probe by the US Justice Department is ongoing.

In a civil case, HP finally sued Lynch and Autonomy co-founder and former CFO Sushovan Hussian in March for $5.1bn in damages for engaging in “fraudulent activity” while at the firm. Both Lynch and Hussain deny any wrongdoing.

In retaliation, the Autonomy former management said they plan to fire a sueball at HP for loss and damage caused by the “false and negligent statements made… and HP’s subsequent smear campaign”.

HP told us, “HP cannot comment as this is a pending legal matter.” ®

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