UK fraud office launches conflict of interest probe in Autonomy case

LONDON – Britain’s Serious Fraud Office has launched an internal inquiry to determine if there is a conflict of interest in its use of software linked to a firm it is investigating.

The SFO, the U.K. government department responsible for investigating complex fraud, acknowledged Tuesday that it had begun a probe into Hewlett-Packard’s allegations that British company Autonomy had misrepresented its true value during sale negotiations with HP.

However, the fraud office also noted that it uses an Autonomy product, Introspect, for document management.

“The SFO is keen to ensure that there is now no conflict of interest or perception of such a conflict, and it is obliged as a first step to make inquiries to ensure that it can continue as the investigating body,” the office said in a statement. “It is undertaking this work at present.”

HP, which is based in Palo Alto, Calif, has accused Autonomy of fabricating sales to drive up its sale price. The U.S. company paid about $10 billion for Autonomy in 2011, only to write $8.8 billion off that figure last November.

Autonomy founder and former chief executive officer, Mike Lynch, has strenuously denied HP’s allegations and demanded that the company provide more evidence. HP has repeatedly said that it is co-operating with legal authorities looking into the allegations.

“We confirm that we have recently been contacted by the SFO. We had written to them in December to request a meeting because we want to know the substance of HP’s vague allegations and want to have a chance to respond to them,” Lynch said in a statement.

“We continue to have confidence that HP’s allegations are without merit and appreciate the director of the SFO’s comment that ‘the opening of a criminal investigation does not mean that individuals are guilty of a crime or indeed that a crime has been committed’.”

The Serious Fraud Office’s investigation is the latest legal fallout from a deal that has saddled Hewlett-Packard Co. with massive losses. The U.S. Justice Department began examining the matter last year, shortly after HP announced its accusation that Autonomy had inflated its value.