Of all the nightmares recently had by Hewlett-Packard (HP), certain one of the biggest was its purchase of the U.K. entity Autonomy. HP purchased the company for roughly $11bn and had to write off over $8bn of the investment. The acquisition fell apart almost immediately and has led to nearly five years of litigation by HP against the former principals of Autonomy (and vice-versa from the former principals against HP.) While the U.K. Serious Fraud Office has closed its investigation of the deal, the U.S. investigation led, by the Justice Department is still ongoing. In short, this acquisition was a failure of such epic proportions that (fortunately) its type is rarely seen in this day and age.
Yet for The Man from FCPA, the HP/Autonomy saga presents several important lessons from the compliance practitioner going forward. First is the requirement to engage in pre-acquisition due diligence from the compliance perspective. HP was limited under U.K. law from the amount of transactions it could review, yet even when red flags were raised they were not followed up by an appropriate level of review.
