February 18, 2014 / 8:16 AM / 4 years ago

UPDATE 1-HP execs knew of Autonomy's hardware sales losses - FT

Feb 18 (Reuters) - Hewlett-Packard Co’s senior executives were aware of Autonomy Corp’s accounting practices months before a whistleblower flagged them, the Financial Times reported citing email records.

Palo Alto, California-based HP has said it was a victim for having paid $11.1 billion to buy Autonomy in 2011. It took a writedown of $8.8 billion in November 2012, accusing Autonomy officials of overstating profits at one of its main British units by 81 percent in the year before it was sold.

Autonomy’s practice of selling hardware to clients at a loss had been documented by auditors and a report was provided to HP after it bought the British software maker, FT said.

HP executives were included in communications about Autonomy’s hardware sales before the whistleblower brought the transactions to light, FT said, citing several emails. ()

In an October 2011 email that Chief Executive Meg Whitman was copied on, Autonomy cited difficulties it was having in selling HP hardware, the newspaper reported.

However, HP said that while it eventually learned about the hardware sales, it knew nothing of the accounting improprieties until the whistleblower came forward, FT said.

“These revelations prove we were open and transparent with our auditors who continue to stand by the accounts,” Autonomy’s former Chief Executive Mike Lynch said in an email statement to Reuters.

“Meg Whitman must answer to her shareholders with what she knew, when she knew it and how she and her senior colleagues made such factually incorrect and serious statements that were so easy to check from the audit packs,” Lynch added.

HP could not be immediately reached for comment by Reuters outside of regular business hours.

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