Drag Autonomy founder's 'fraudulent guns' and 'grasping claws' to the US for a criminal trial, thunders barrister
- Reference: 1612957509
- News link: https://www.theregister.co.uk/2021/02/10/mike_lynch_extradition_us_opening_arguments/
- Source link:
Mark Summers QC did not hold back in his opening statement as he explained why Westminster Magistrates' Court should order the extradition of 55-year-old Lynch to the US to stand trial on 17 counts of fraud.
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"The central allegation is that prior to the sale, between January 2009 and October 2011," Summers told the court in written submissions, "the Defendant was the leader of a corporate conspiracy to fraudulently inflate the reported revenue, earnings and value of Autonomy, in order to deceive purchasers and sellers of Autonomy's shares, and potential buyers of the company, such as HP."
Lynch is wanted in America over claims that he broke US laws when Hewlett Packard, as was, bought Autonomy for [2]$11bn in 2011 . Shortly after the buyout, HP [3]wrote down Autonomy's value by $8.8bn and cried that Lynch and his top managers had cooked Autonomy's books.
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Those allegations were summarised in UK court documents made public yesterday. Lynch is alleged by the US government to have:
Wiped hard drives, backups, and former Autonomy finance veep Steven Chamberlain's company laptop
Lied to HP during a key meeting in 2012 about Autonomy's hardware revenues
Paid "hush money" to former Autonomy personnel by hiring them to work at his next companies, investment firm Invoke Capital and infosec firm Darktrace
Laundered money from the overall Autonomy fraud
These all amounted to UK criminal offences, said Summers, including perverting the course of justice – for which the maximum sentence is life imprisonment.
"English thieves have no expectation of local justice when they target their fraudulent guns or grasping claws on American companies and American money," the barrister told the judge in court yesterday afternoon as he put forward the US government's case.
Mike Lynch extradition: Uncle Sam offered Autonomy founder $10m bail if he stood trial in the US [5]READ MORE
Both defence and prosecution cases are focused on section 83A of the Extradition Act 2003, known as the forum bar. Summers told the court that Autonomy had a US-incorporated subsidiary and that Lynch had a house in the US – though Alex Bailin QC, for Lynch, appeared to object to that suggestion during Summers' speech.
If true, those allegations would count against Lynch's pleas that he was a British citizen who only visited the US annually and for a month at a time. In turn, the judge could hold them against him – and rule that his allegedly criminal conduct had enough of a US connection to deserve a US criminal trial.
The legal argument here is no trifling technicality. [6]Section 83A(2)(a) of the Extradition Act says that if Lynch was in the UK when he performed "a substantial measure" of the things the US is complaining about, the judge must rule against extradition.
Case law (including [7]accused hacker Lauri Love's extradition showdown with the US government ) has shown that somebody who commits a crime while in Britain and where the effects of that crime are mostly felt abroad is enough to clear the "substantial measure" bar.
The US's barrister told District Judge Michael Snow that he should interpret this widely, in a way that favours the pro-extradition argument: "The most important word in section 83A(2)(a) is the word 'a'. It does not ask you whether 'the' substantial measure occurred in the UK, it asks merely whether 'a' substantial measure of the conduct occurred in the UK. A substantial measure of conduct can occur in the UK even if the majority, even if the preponderance of it, is US centric."
In support of this, Summers said that 79 per cent of HP's shareholders were based in the US at the time of the Autonomy buyout – and that Lynch's actions as Autonomy CEO had a "significant" effect on those companies and shareholders.
"On the most conservative estimate possible, [HP] had been deceived by at least $1.7bn," said the barrister in written submissions, adding: "Even if the abstract reputational harm to the UK financial markets can cancel out the real and crippling reputational harm caused to HP (which it cannot), the loss in this case all fell in and on HP in the USA. This is a factor that strongly favours extradition to the USA."
The extradition case continues. As The Register [8]reported yesterday , District Judge Snow's decision will be reserved until High Court judge Mr Justice Hildyard delivers his judgment in HPE's £3.3bn civil claim against Lynch and his former CFO, Sushovan Hussain. ®
Bootnote
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Lest it be thought that Summers' fire-and-brimstone rhetoric makes him some sort of American lickspittle, he also represented Julian Assange in that man's [10]battle to escape a US government extradition attempt .
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[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_business/policy&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YCQRJMxDfmn5SW0RiYriSgAAAFU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://www.theregister.com/2011/08/19/hp_buys_autonomy/
[3] https://www.theregister.com/2012/11/20/hp_alleges_autonomy_fraud/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_business/policy&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YCQRJMxDfmn5SW0RiYriSgAAAFU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2021/02/09/mike_lynch_extradition_autonomy_hpe/
[6] https://www.legislation.gov.uk/ukpga/2003/41/section/83A
[7] https://www.theregister.com/2018/02/05/lauri_love_extradition_judgment/
[8] https://www.theregister.com/2021/02/09/mike_lynch_extradition_autonomy_hpe/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_business/policy&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YCQRJMxDfmn5SW0RiYriSgAAAFU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://www.theregister.com/2021/01/04/julian_assange_extradition_judgment/
[11] https://whitepapers.theregister.com/
And yet when Americans run over kids in their SUVs and we ask them to face justice, they say 'no'.
Not an option.
"These all amounted to UK criminal offences, said Summers, "
Then they should be tried in an English court and not used to assuage American amour-propre.
What is wrong with British justice, eh USA? Not punitive enough for you? Or is another case of American exceptionalism?
Re: Not an option.
While I agree with you in spirit, I do not in practice. The US actively prosecutes and imprisons senior executives for financial crimes. High flying businessmen in orange jumpsuits is not an uncommon sight.
But I'm racking my brains for when the last FTSE500 board member was put away. Oh, now I do. From Wikipedia:
"Ernest Walter Saunders (born 21 October 1935) is a British former business manager, best known as one of the "Guinness Four", a group of businessmen who attempted fraudulently to manipulate the share price of the Guinness company. He was sentenced to five years' imprisonment, but released after 10 months as he was believed to be suffering from Alzheimer's disease, which is incurable. He subsequently made a full recovery."
It's sad that senior business people may have little fear of the English judicial system. Just remember how many fraud investigations have failed. The system here is just not designed to combat white collar crime. It's good that someone else may do their job for them. Even if I agree US Justice has its blind spots too.
Re: Not an option.
I believe Mr. Saunders remains the only person in British medical history to have made a full recovery from dementia. I recall that at the time it was described as "irreversible pre-senile dementia" rather than Alzheimer's disease, but I don't know enough about either condition to know if they are related.
Quite the modern miracle.
Re: Not an option.
The US actively prosecutes and imprisons senior executives for financial crimes. High flying businessmen in orange jumpsuits is not an uncommon sight.
Does that extend to "high flying" orange hued businessmen?
What is wrong with British justice ...?
Both.
Tangentally, the Americans think they're so special that they don't take kindly to the idea that Americans be tried or otherwise/jdged by any other country. Why do you think the US has not joined the International Criminal Court?
OOoooooK
So criminal activity took place in the UK, some impatient blinkered USofA company decided to skip due diligence despite warnings of imperfections and drop a metric shedload of dosh to buy said company. <-- that's certainly my synopsis
I just cannot see how this UK company harmed any USofA stockholders since it is the *board* of the USofA company that failed entirely to protect the company, and so the stockholders, by skipping due diligence. The US DOJ should be prosecuting the board members of the USofA company at the time of the takeover for gross criminal negligence or whatever they have over the pond, and the UK MOJ should be nailing up the cell door on Mr Lynch.
Having just noticed that the US DOJ tries really really hard not to prosecute rich people the stockholders should be suing the members of the board at that time.
Re: OOoooooK
Indeed, if selling overpriced stuff is illegal there are a lot of companies that should be worried.
Re: OOoooooK
"Having just noticed that the US DOJ tries really really hard not to prosecute rich people the stockholders should be suing the members of the board at that time.."
Looks suspiciously to me like they're hoping to try and convict a foreigner in America in order to deflect any blame from the 'board' and convince the stockholders it was ALL his fault.
Re: OOoooooK
I've long thought that the crux of this case was protectionism, much like the Huawei furore. Much better to blame Johnny Foreigner for being duplicitous than admit incompetence.
How long before HP expressed interest did the 'ramping' start?
Lynch is accused of various unlawful acts to make Autonomy appear to be far more profitable than it was. And the extradition legal argument is around whether they were carried out in the US or had an impact on US citizens or corporations. A pertinent question, therefore, would be how much of this activity occurred before HP expressed an interest?
If it happened beforehand - in the hope of luring any buyer to overbid - then that would seem to be a UK only offence that can't count as having an American component because no buyer was known at that point. Once HP expressed an interest then it seems reasonable to count any further 'ramping' activities as having an American impact.
My own recollection is that Autonomy was ludicrously overhyped from its very start, which would seem to point towards any alleged offences being UK ones.
Re: How long before HP expressed interest did the 'ramping' start?
If ludicrous overhyping was a crime, yes. And god, how I wish it was.
Can't we just grant him retrospective Diplomatic Immunity?
Due diligence
Yet again HP are avoiding the real issue, that their due diligence was not performed by a set of the usual culprits (was it E&Y? I can’t recall).
I have nearly run out of popcorn. The last bag is in my coat pocket and my covfefe supply is still stuck in Zeebrugge awaiting customs clearance.
Re: Due diligence
>Yet again HP are avoiding the real issue
I seem to remember in one of the previous court cases, either the HP board said (or it went unchallenged) that they didn't bother to read the due diligence report...
Re: Due diligence
Funny that. I seem to remember it too - hope we are not at risk of 'corrective' spook action!
Re: Due diligence
Perhaps this article?
https://www.theregister.com/2019/04/03/apotheker_autonomy_buyout/
This quote may be what you are referring to:
“Did you ever read any report by KPMG on the due diligence?” Miles asked Apotheker, to which the former CEO replied: “No, I didn’t.”
Re: Due diligence
It's more than due diligence. Autonomy was always an obviously overvalued company. Kind of like anything AI these days...
Basically, HP paid far over-the-odds for a company producing a very, very niche product for data scientists.
If you buy a blockchain company today, then expect a high risk of not making your money back. To buy a company you need to be sure that you buying them is going to increase that companies sales. Then you need to be sure that increase will pay back your purchase in 3-5 years.
Where there's limelight there's always prima donnas
Lest it be thought that Summers' fire-and-brimstone rhetoric makes him some sort of American lickspittle, he also represented Julian Assange in that man's battle to escape a US government extradition attempt.
That's hardly a ringing endorsement, El Reg, although his activity is a nice little earner for him. There is surely no doubt about that.
> "The most important word in section 83A(2)(a) is the word 'a'. It does not ask you whether 'the' substantial measure occurred in the UK, it asks merely whether 'a' substantial measure of the conduct occurred in the UK. A substantial measure of conduct can occur in the UK even if the majority, even if the preponderance of it, is US centric."
That seems a poor distinction for the pro-extradition side to make, you'd expect them to be arguing the other way, as their argument seems to say that it just needs to be a substantial measure, rather than the majority of the conduct.
Which is reasonable, except:
> (2)For the purposes of this section, the extradition would not be in the interests of justice if the judge— (a)decides that a substantial measure of D's relevant activity was performed in the United Kingdom; and
So their argument seems to be that a minority of the conduct (so long as it is in itself a substantial measure) would be enough to bar extradition.
Are El Reg sure it was the US's barrister that said this, and not the defence?