Internal documents show how a Silicon Valley giant planned on killing bad press over a disastrous $11 billion acquisition
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Former HP CEO Meg Whitman.
HP was about to tell the world some extremely bad news: It would be swallowing an $8.8 billion writedown on its much-vaunted acquisition of British software firm Autonomy only a year after the deal closed. And it would claim $5 billion was down to fraud, and pin the blame squarely on Autonomy's leadership.
The dilemma - which on Wednesday became the focus of a blockbuster fraud trial over the Autonomy deal - was how to minimise the inevitable bad headlines, and shield its relatively new CEO Meg Whitman and its board from criticism.Read more: HP's blockbuster $5.1 billion legal battle against Autonomy's former CEO Mike Lynch kicks off Monday
HP's Project Sutton plan was revealed during its $5 billion court case against two former Autonomy execs - former CEO Mike Lynch and former CFO Sushovan Hussain.HP has accused the pair of defrauding HP to the tune of $5 billion, cooking Autonomy's books to make the firm's revenues look much healthier than they really were. The pair deny wrongdoing.
During their opening remarks on Wednesday, Lynch's lawyers pointed to HP's 25-page plan as an example of how it would "blame other people" for the botched Autonomy integration.According to the documents shown in court, there were two major goals for HP: Get in front of the story, and protect the people at the top.High Court, Chancery Division
Specifically, HP wanted to "preserve the credibility of the CEO and management," and "defend the board from attacks." It also wanted to avoid a resurgence in headlines about "drama" at the company.
The Silicon Valley firm particularly wanted to get the British government and press onside, in the full knowledge that the Autonomy deal was the biggest in the UK tech sector at the time. It was also about to impugn the reputation of Lynch, a decorated luminary of the British tech scene.The document states: "[Autonomy] write-down and underlying could have very negative impact - brand, credibility of board and mgmt, UK government, customers, employees, industry analysts, investors."
High Court, Chancery Division
In a detailed section on HP's UK government lobbying efforts, the firm laid out its plans to contact some 59 ministers, politicians, and civil servants.
High Court, Chancery Division
The documents specifically name then-Prime Minister David Cameron, then-Chancellor George Osborne, and many other senior ministers and political figures in the coalition government and the Labour Party. HP planned to contact all 59 about the writedown either by email, phone call, or letter.
High Court, Chancery Division
But Robert Miles QC, for Lynch, suggested the "aggressive" communications strategy illustrated HP's plan to scapegoat Lynch and Hussain for its own mismanagement of the Autonomy deal.
"It's about blaming other people to protect the back of [Meg Whitman and HP's board]" he said. "To do it through an aggressive approach, which is exactly what they did."
You can read the documents in full here:The case continues.
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