Jonathan BrowningSun, 7 February 2021, 5:00 am
(Bloomberg) — British software tycoon Mike Lynch spent almost a year battling Hewlett-Packard Enterprise Co. in a London court. This week, he prepares to face U.S. prosecutors seeking to have him stand trial in America to face criminal charges.
Lynch is still waiting for the judge’s verdict on the $5 billion civil claim brought by HP — some twelve months after the hearings finished. He’s now fighting extradition on charges stemming from HP’s purchase of his firm, Autonomy Corp., and its ignominious downfall.
The Department of Justice alleges that Lynch oversaw a fraud at Autonomy by boosting sales, making his firm more attractive to HP. The U.S. hardware giant acquired Autonomy for $11 billion in 2011 only to write down the value by $8.8 billion a year later.
But Lynch, who made more than $800 million from the sale, is opposing any move to America, aiming to take advantage of a key amendment to the U.S-U.K. extradition treaty. He’s set to assert that Britain would have been a more appropriate place for a criminal trial, even though local prosecutors chose not to pursue an investigation.
It’s an argument that was successfully made by a former HSBC Holdings Plc banker, Stuart Scott. He was the bank’s head of currency trading, and the court blocked his extradition after deciding that much of the alleged misconduct took place in the U.K.
Still, Scott stands out as one of just a few individuals to meet the high threshold of the forum argument, said Ben Keith, an extradition lawyer who isn’t involved in the case.
“In actual fact, there’s quite a lot of hoops that you have to go through to to show you could be prosecuted in the U.K. rather than in U.S.,” Keith said, noting that Lynch’s lawyers will have to address where any harm from the alleged fraud occurred.
Lynch for his part has insisted from the outset that he should never be tried in America.
“These matters concern a British citizen, U.K.-based conduct, a U.K. listed Plc, culminating in a U.K. civil trial in which judgment is pending — these matters unquestionably belong here in the U.K.,” Lynch’s lawyer Alex Bailin said at an earlier hearing.
British lawmakers including David Davis said last year that the treaty is unequal and that the U.K. government should delay the extradition until the judgment in Lynch’s London case was known.
The civil trial wrapped up last year with Lynch saying that HP spent tens of millions of dollars attempting to prove fraud, but failed to tie him to any wrongdoing. His attorney argued that HP brought the case “out of buyer’s remorse.”
Judge Robert Hildyard is still writing his ruling in the civil case, but the extradition judge, Michael Snow, won’t be making a final decision on the alleged misconduct.
“It’s not a decision on his guilt or innocence,” Keith said. “That’s solely a matter for a jury in the U.S.”
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