LONDON (Reuters) – Britain’s accountancy watchdog has filed formal complaints against the auditors and two former finance executives of Autonomy, the software business that was sold to Hewlett Packard (HP) for $11 billion (8.3 billion pounds) in 2011.
The Financial Reporting Council (FRC) said the conduct of auditors Deloitte, Richard Knights and Nigel Mercer, as well as that of former chief financial officer Sushovan Hussain and ex-vice president of finance Stephen Chamberlain, had fallen significantly short of standards expected of them.
Hussain and Chamberlain were alleged to have acted dishonestly and/or recklessly, including when preparing the company’s accounts for 2009 and 2010, the FRC said.
A date for a Tribunal hearing will be announced in due course.
Hussain was convicted by a U.S. jury last month of wire fraud and other crimes related to claims that he inflated the firm’s value before its sale to HP.
The Autonomy deal was supposed to form the central part of HP’s move into software but instead led the U.S. company a year later to write-off three-quarters of Autonomy’s value.
It has been in a legal battle with Autonomy’s former executives since then, alleging that it was deceived about Autonomy’s financial condition and prospects for growth.
The FRC said its investigation had been carried out in parallel with criminal and civil investigations in both the United States and Britain.
Deloitte UK said it acknowledged Thursday’s announcement from the FRC and had fully cooperated with the investigation.
“We are disappointed that these complaints have been brought and we will defend ourselves against them at Tribunal,” a Deloitte spokesman said.
(Reporting by Ben Martin and Paul Sandle; Editing by Edmund Blair)