HP jolted by $8.8 billion fraud

Nov. 20, 2012 at 11:44 AM

NEW YORK, Nov. 20 (UPI) -- U.S. technology giant Hewlett-Packard said Tuesday a $10 billion purchase in 2011 would result in an $8.8 billion write-off due to accounting fraud.

HP purchased British software firm Autonomy Corp. last year, then hired a forensic accounting firm to review the transaction after an Autonomy executive came forward to reveal the potential fraud, The New York Times reported.

The executive came forward after HP closed on the deal, which was widely criticized as an expensive deal even before the fraud was revealed, the Times said.

Former Chief Executive Officer Leo Apotheker managed the purchase of Autonomy and left HP a month after the deal was made.

That was HP's second shakeup in the top office. Apotheker's predecessor, Mark Hurd, resigned abruptly just a year prior to that under a cloud of sexual harassment charges.

Apotheker was replaced by former eBay executive Meg Whitman.

HP said it had reported the fraud to the U.S. Securities and Exchange Commission and British Serious Fraud Office. It was also considering lawsuits, Whitman said.

The deal was reviewed by accounting firm Deloitte. In turn, HP hired the accounting firm KPMG to review Deloitte's report.

Neither Deloitte nor KPMG discovered the accounting fraud, however.

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