Autonomy Founder Rounds On HP Accusers

Mike Lynch Statement In Full

Updated: 10:42am UK, Friday 28 December 2012

Here is the full statement released by Mike Lynch, Autonomy's founder, in response to HP's regulatory filing in the US on Thursday:

""It is extremely disappointing that HP has again failed to provide a detailed calculation of its $5 billion write-down of Autonomy, or publish any explanation of the serious allegations it has made against the former management team, in its annual report filing today.

Furthermore, it is now less clear how much of the $5 billion write-down is in fact being attributed to the alleged accounting issues, and how much to other changes in business performance and earnings projections. This appears to be a material change in HP's allegations.

Simply put, these allegations are false, and in the absence of further detail we cannot understand what HP believes to be the basis for them.

We also do not understand why HP is raising these issues now given that Autonomy reported into the HP Finance team from the day the acquisition completed in October 2011, there was an extensive due diligence process and Autonomy was audited as a public company for many years.

We would particularly make the following points:

:: HP's CFO Cathie Lesjak and her team, plus a number of outside advisors, had access to all Autonomy accounts and documents from October 2011 onwards, and raised no issues.

:: Beginning in November 2011, HP and KPMG reviewed Autonomy's closing balance sheet in detail, and Ernst & Young reviewed Deloitte's audit work papers.

:: Beginning in October 2011, HP studied in detail Autonomy's tax structure and transfer pricing as well as its revenue recognition practices (led by Paul Curtis, HP's worldwide head of revenue recognition).

:: An independent, third-party valuation of Autonomy's assets was carried out in January 2012.

:: Quarterly business reviews were held with Autonomy management, Meg Whitman and Cathie Lesjak to discuss Autonomy's financial performance.

:: HP has continued to sell and account for hardware alongside Autonomy software in the same way that Autonomy did for the year since the acquisition completed.

:: Regarding differences between IFRS and US GAAP accounting standards, which appear to have a role in some of the allegations HP has made, Autonomy's accounting policies were made clear in Autonomy's 2010 annual report.

We also note the statement in HP's annual report that it received confirmation from the U.S, Department of Justice on 21 November 2012 (the day after HP's first public statement), that the Department had opened an investigation. We can confirm that we have as yet had no contact from any regulatory authority. We will co-operate with any investigation and look forward to the opportunity to explain our position.

We continue to reject these allegations in the strongest possible terms. Autonomy's financial accounts were properly maintained id in accordance with applicable regulations, fully audited by Deloitte, and available to HP during the due diligence process.

We remain deeply concerned about how this process has been conducted, and believe it is in everyone's interest for it to be resolved as soon as possible."

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Tata Group Says 'Ta Ta' To Boss

The brains behind one of the world's most successful companies has handed over the reins of his vast business empire.

The head of India's Tata Group, Ratan Tata, used his 75th birthday to fulfil his retirement as chairman after steering the group for 21 years and transforming it into a streamlined conglomerate of more than 100 companies which include Jaguar Land Rover and Tetley Tea.

He passed the baton to 44-year old Cyrus Mistry, who brushed his way past reporters as he arrived to take the helm at Tata's headquarters in Mumbai, in a move that typically lacked any fanfare or signal of change for the company.

Mr Tata, a bachelor with no children, generated headlines as the driving force behind the creation of the Nano, billed as the world's cheapest "people's" car as well as for the 2008 purchase of prestige British car brands Jaguar and Land Rover.

From luxury cars to steel, Tata is India's largest group with total combined sales of $100bn (£60bn) in 2011-12, nearly 60% of which came from business outside India, mainly the United States and Britain.

Ratan Tata took control of Jaguar Land Rover in 2008

During Ratan Tata's time at the helm, the organisation went on a global purchasing spree, acquiring major names ranging from Tetley Tea to the Anglo-Dutch steel firm Corus in 2007 for $13.7bn.

In addition, Tata Motors is India's top vehicle maker while Tata Consultancy Services is its largest software outsourcer.

The group's progress over the past two decades has coincided with the rapid economic development of India, which observers say Mr Tata played a major role in.

An editorial in the Hindustan Times read: "The Tata group has been the spearhead of India's integration with the world economy.

"The Tatas are ahead of the pack in aligning corporate governance with international practices and this serves as a springboard for a new generation of the the global Indian manager."

Pradip Shah, chairman of IndAsia Fund Advisors, said: "Tata led the group with vision, drive, tenacity and skill." He added that Mr Mistry's challenge would be "inheriting people and building teams".

The Tata Nano is one of India's best-selling cars

Tata Steel is the world's seventh-largest steel producer but is now having problems with downbeat business conditions in Europe. The group's telecom, power, hotel and finance arms also face difficulties.

Mr Mistry, who was chosen as Mr Tata's successor in November last year, is the the son of Irish citizen Pallonji Mistry, whose construction firm Shapoorji Pallonji is the biggest shareholder of Tata Sons.

He successfully grew his family's construction business turnover seven-fold to almost $1.5bn since he became managing director in 1994.

Mr Tata, now "chairman emeritus" with the group, plans to remain head of the charitable trusts that own two-thirds of main holding company Tata Sons.

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UK Economy: Workers Face A 'Hard Year Of Slog'

A number of reports are warning of a tough 2013 in the jobs market, with one study predicting it will be a "hard year of slog" for even those in work.

Dr John Philpott, director of The Jobs Economist, believes workers can expect longer hours, a continued squeeze on pay and fewer jobs being created.

His analysis suggests job insecurity will remain high, with workers having to maintain a "grin and bear it" attitude.

The study forecasts that the trend in falling unemployment will come to an end with the jobless total increasing by 120,000 to 2.63 million in 2013 because growth in the workforce will exceed the number of jobs being created.

However, youth unemployment would fall below 900,000, while long-term unemployment will remain broadly the same.

The outlook also forecasts that pay deals would continue to be affected by unemployment, with increases lagging behind inflation, leading to wage cuts for workers in real terms.

He said: "Our jobs outlook for 2013 is relatively optimistic in that we expect only a modest rise in unemployment. However, the fact that this can be considered good news merely underlines the harsh reality of current economic austerity.

"GDP may grow somewhat faster but 2013 will be another year of hard slog, with longer hours for those lucky enough to have jobs and a further squeeze on living standards for workers and the jobless alike."

But a separate study painted a slightly better picture for the longer term.

A report for the Chartered Institute of Personnel and Development (CIPD) said that continued growth in employment was likely in 2013, with the number of people in work potentially reaching a historic milestone of 30 million before the next general election in 2015.

Latest figures showed there were 29.6 million people in employment in the quarter to October, an increase of almost half a million on a year earlier.

However, the study also warned that excess capacity had built up in some firms as employers held on to skilled and talented staff, which could lead to weaker employment growth even if the economy picks up.

Mark Beatson, chief economist at the CIPD, said: "The jobs enigma, of strong growth in private sector employment in the absence of sustained economic growth, has been one of the most mystifying economic features of 2012, and if 2012 proved an enigma, the labour market appears equally difficult to pin down for 2013.

"Although the flexibility of the UK labour market is an important factor, the popular focus on under-employment as a major factor in explaining rising overall employment seems overplayed.

"While there are undoubtedly significant numbers of people working fewer hours than they would like, and this is an issue that merits further investigation and consideration by policy makers and employers alike, the numbers have not increased significantly this year, making it a poor explanation on its own for the 2012 jobs enigma.

"On balance, there are likely to be further increases in employment. Rising employment alongside muted growth indicates that employers have significant reserves of skilled labour capacity on which to call to support growth."

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Hector Sants: Ex-FSA Chief Awarded Knighthood

The man tasked with regulating the City in the run-up to the near-collapse of the UK banking system has been knighted in the Queen's New Year Honours.

Former Financial Services Authority (FSA) chief executive Hector Sants has been recognised for services to financial regulation after overseeing sweeping reforms following the nationalisation of Northern Rock and the bailout of major banks.

The knighthood may be seen as a controversial decision, as it was Sir Hector who led the organisation accused by MPs of being "asleep at the wheel" in the run up to the collapse of Northern Rock.

While he was criticised for the FSA's failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.

Sir Hector said the award was a "testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary".

The 56-year-old had planned to leave his role in February 2010, but was convinced by Chancellor George Osborne to stay on to see through the coalition's break-up of the FSA.

It was thought he would become a deputy governor of the Bank of England and head the Prudential Regulation Authority (PRA) - one of two new regulatory bodies that will replace the FSA as part of an overhaul in the wake of the financial crisis.

But Sir Hector unexpectedly resigned earlier this year and has courted more controversy, joining scandal-hit Barclays, where he will become the bank's first point of contact for regulators.

He is believed to be in line for a £3m pay package.

The FSA received a mauling from MPs in the wake of the banking crisis and collapse of Northern Rock.

Northern Rock had to be nationalised in 2008, with the Government also having to bail out Royal Bank of Scotland, Lloyds TSB and HBOS.

In the aftermath of the crisis, Sir Hector warned the City to "be frightened" as he pledged an era of more intrusive and direct regulation.

He also laid the blame at the door of the US and UK governments for their part in the crisis, saying authorities worldwide sought to "encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing".

Sir Hector joined the FSA wholesale markets arm from Credit Suisse in 2004. He became chief executive in 2007 - just two months before the run on Northern Rock.

It had been widely expected that Sir Hector would return to the private sector when he resigned from the FSA.

Barclays, which has had its reputation battered following this summer's rate-rigging revelations, has appointed Sir Hector to the newly-created role of head of compliance. He is due to start on January 21.

It is believed he will also play a central role in rewriting the bank's pay and bonus strategy.

Sir Hector is married with three children.

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Can China's Baijiu Take On Sake And Tequila?

By Mark Stone, China Correspondent

A British drinks company is taking a gamble by attempting to export baijiu, China's national drink, to the world.

Diageo recently bought Shui Jing Fang, a high-end brand of baijiu based in the Chinese city of Chengdu.

The problem is that while baijiu, a white spirit-based drink, may refresh diners and lubricate business meetings across China, the common perception outside the country is that it is revolting.

However, that doesn't worry Diageo's Asia-Pacific President, Gilberte Ghostine.

He told Sky News: "What you have to remember is that the baijiu expansion has only just started.

"Look at Japan's sake or Mexico's tequila. Sake is consumed in all the Japanese restaurants in the world, not only by Japanese but also by foreigners.

"And if you look at tequila; its expansion started 30 or 40 years ago and now it is being consumed in Western bars."

As a baijiu virgin, I was invited to join a group of diners at a Beijing restaurant.

It was an experience.

Sky's Mark Stone tastes baijiu

The flavour is hard to describe. It is sharp, potent and with a lingering, almost ammonia-like aftertaste. It burns right the way down your throat.

It is usually served at room temperature in a small shot glass and with a meal. It has an extremely high alcohol volume of between 40% and 60% proof.

Most of the encouragement from my fellow diners came from Mr Lee, who clearly loves the stuff. I reluctantly took my fourth shot from him as he explained why he thinks it is so good.

"I often go to parties and drink foreign alcohol and I get a headache afterwards," he said. "I prefer to drink baijiu because I never get a headache.

"I welcome foreigners to drink baijiu... they won't understand real happiness until they do," he insisted.

It is clear that baijiu is a culture in China, not just a drink. In buying into that culture, Diageo hopes to make money that will be pumped back into the British economy.

"When you look at the alcoholic drinks industry in China, you're talking about an industry worth £45bn. Over 50% of that is baijiu. So it is a very important category," said Mr Ghostine.

Shui Jing Fang is now available in 40 airports around the world and in eight domestic markets including the UK.

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Pig Farming Crisis To Push Up Pork Prices

By Emma Birchley, Sky News Correspondent

Supplies of British pork on shop shelves are under threat as pig farmers struggle to stay in business.

Cripplingly high feed costs caused by global wheat and soya shortages have forced many farms to close already.

The problem, according to Essex farmer Fergus Howie, is that most producers are not being paid enough by supermarkets to make a profit.

"It's unsustainable to continue farming pigs when you are losing on every single pig that you produce so pig farmers throughout the country and in Europe and America are packing up and going out of business.

"We are certainly losing about £10 a pig."

Some producers are now being offered deals that enable them to make a small profit, but many of those who are not so lucky have resorted to slaughtering more breeding sows to cut their costs.

Since mid-June an extra 15,500 sows have been slaughtered. That works out at between 3% and 4% of the total UK breeding herd.

The National Pig Association expects the result to be increased prices of bacon and sausages by the autumn.

"Because of the length of the production cycle, we won't see the impact of these numbers going out of the herd for eight to 12 months," said Zoe Davies, the NPA's general manager.

"That's when we will start to see the shortages and the prices probably creep up."

More sows are also being slaughtered across Europe which will add to the shortage of pork. And there are other changes afoot across the Channel that are likely to affect supply.

In 1999, a ban was brought in on small metal crates known as sow stalls in the UK.

Only now are similar welfare rules being brought in across EU. In theory, it should make it easier for British farmers to compete.

But Fergus Howie remains to be convinced that the law will make the difference it should.

"If is is properly implemented it will be a fair playing field but we are really worried that it won't be properly implemented and product will be coming into this country that would be illegal."

At Wicks Manor in Tolleshunt Major, the Howie family make bacon, sausages and ham from their animals and that has helped keep the farm afloat.

But for the farmers relying on a fair price for their pigs, it looks set to be another year of battling to stay in business despite prices rising on the shelves.

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First-Time Home Buyers 'Up 12% In Past Year'

The past 12 months saw 12% more first-time buyers take the plunge into the property market than in 2011, according to a report by the Halifax.

About 216,000 people got their feet onto the property ladder in 2012, the highest number since the credit crunch began.

But it is still almost half the 402,800 people who bought their first home in 2006.

The average age of a first-time buyer has increased to 30, from 29 a year ago, and the typical deposit required is now 20% - compared with the deposit of around 10% put down in 2007.

Halifax said the rise was due to more mortgages coming on the market.

The number available has increased by around a fifth since a multibillion-pound Government scheme was launched in August to kick-start lending to firms and households.

The Government also recently introduced the NewBuy scheme, which helps people to buy a new-build home with a fraction of the usual deposit.

Martin Ellis, housing economist at Halifax, said: "The number of first-time buyers has risen to a five-year high, boosted by the improvement in affordability resulting from the reductions in both house prices and mortgage rates in recent years.

"Conditions for potential first-time buyers, however, remain very difficult with problems raising the necessary deposit and concerns over the economic climate."

He also said that first-time buyers have become increasingly reliant on extra help to give them a push onto the ladder.

The Council of Mortgage Lenders (CML) recently estimated that 65% of this sector of the market had financial assistance in mid-2012, compared with 31% seven years earlier.

First-time buyers in London put down the largest average deposit, at £62,356, while those in the north put down the smallest, at £14,936.

The average deposit needed across the UK is £27,984.

The average house price paid by a first-time buyer increased slightly to £139,921 in 2012 - representing a 3% rise compared with 2011.

Related stories

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French Court Rejects 75% Tax Rate For Rich

French president Francois Hollande has suffered a fresh setback as the country's highest court threw out his plan to tax the ultra-wealthy at a 75% rate, saying it was unfair.

It had been one of the flagship campaign promises of Mr Hollande's election and the government has vowed to resubmit the measure.

But France's Constitutional Council ruled that the way the highly contentious tax was designed was unconstitutional.

The largely symbolic measure would have only affected a few thousand people who earned over €1m (£818,000) and brought in an estimated €100m to €300m (£82m to £245m).

But it has infuriated high earners in France, prompting some such as actor Gerard Depardieu to flee abroad, and has led to accusations that Mr Hollande is 'anti-business'.

Finance minister Pierre Moscovici said the rejection of the 75% tax and other minor measures could cut up to €500m in forecast tax revenues but would not hurt efforts to slash the public deficit to below a European Union ceiling of 3% of economic output next year.

"The rejected measures represent €300m to €500m. Our deficit-cutting path will not be affected," Mr Moscovici told BFM television.

Socialist President Hollande has his sights set on the super rich

Prime Minister Jean-Marc Ayrault said in a statement that the government would resubmit the measure to take the court's concerns into account.

The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members.

A household with two earners each making just under €1m would be exempt from the tax, while one with one earner making €1.2m would have to pay.

The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country's mounting fiscal problems and would drive away the wealthiest citizens.

In recent weeks, Gerard Depardieu - France's most famous actor - announced his intention to turn in his French passport and move to a village in a tax-friendly Belgium.

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Norovirus Cruise: 'Outbreaks' On Two Ships

More than 400 passengers and crew have been sick with vomiting and diarrhoea as suspected norovirus hits two cruise ships sailing in the Caribbean.

Both luxury liners, the Queen Mary 2 and the Emerald Princess, reported the outbreak to the Centres for Disease Control, following guidelines that come into play when more than 2% of the passengers and crew are laid low.

The US public health agency said it was still conducting lab tests to determine the pathogen, but it said norovirus was suspected.

On Cunard's Queen Mary 2, which left New York on December 22 for a 10-day cruise, 194 passengers and 11 crew members of the more than 3,800 people were reported ill, the CDC said.

And on the Emerald Princess, owned by Princess Cruises, which returned to Fort Lauderdale on December 27, 189 passengers and 31 crew members of the more than 4,400 people on board fell sick, the CDC said.

The CDC said both liners had taken steps to stem the outbreak, including cleaning and disinfecting more often, as well as keeping passengers informed.

Passengers were told to avoid the buffet

But Sue Hayes, from Arkansas, said she was on the Emerald Princess and her husband fell ill. She has been critical of how the crew members handled the crisis.

"It started just a couple of days into the cruise and has affected so many that the staff can't keep up with what they have to do for those who are sick," she said on Facebook.

"I have to phone to get the room cleaned because there aren't enough staff to even get clean towels and the room stewards are not allowed to come into the room.

"I have gone and got food for him because it may be a long time to get it delivered, like two hours after scheduled."

Some people who said they were on the Queen Mary 2 said on Cruise Critic that they were advised to avoid the buffet because of the sickness and that infected passengers were being kept in their rooms.

"I have never felt as sorry for the staff as I do now. They are working round the clock battling this situation," Andiamo said on the blog.

"It is serious, but in my opinion it is being handled very well.

"The festivities continue and those of us who have avoided this virus continue to enjoy the many offerings we come to expect and appreciate.

"For those passengers who have been exposed, they are confined to their cabins until declared safe to come out."

Sky News contacted both Cunard and Princess Cruises for comment but both companies said no one was available to comment.

Similar outbreaks hit two P&O luxury liners - the Azura and the Oriana - earlier this month.

More than 200 people fell ill on the Emerald Princess

The cruise ship infections come as norovirus is thought to be behind the deaths of four people in a hospital in Japan.

The patients, aged between 80 and 97, died of breathing problems and pneumonia last week after suffering vomiting and diarrhoea, said officials at Denentoshi Hospital in Yokohama.

Almost 100 other people have been infected at the hospital since Tuesday.

Norovirus has been sweeping the UK and has led to the closure of dozens of hospital wards.

The Health Protection Agency said there could have been more than a million cases in the UK this season.

The number of cases has risen earlier than expected this year, following an as-yet unexplained trend seen across Europe and other parts of the world.

Norovirus symptoms include sudden vomiting, diarrhoea, or both, a temperature, headache and stomach cramps. The bug usually goes away within a few days but can be contagious for a couple of days after vomiting has ended.

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No Deal As US Nears Fiscal Cliff Deadline

Investors are reacting nervously as the clock ticks down to the New Year deadline for a deal to prevent the US falling over the so-called 'fiscal cliff'.

A series of costly tax rises and spending cuts worth more than $500bn will come into force as 2013 begins in America, unless Congress and the White House can agree compromise measures to stop them being implemented.

The 'fiscal cliff', as it came to be known, was designed to help tackle the country's huge debt pile in the event squabbling politicians could not do a deal beforehand to ease the burden.

The fiscal cliff worries investors as economists fear the pain of implementing the measures will tip the US back into recession and therefore hit world demand and growth prospects.

In London, the FTSE 100 lost 0.5% of its value to close at 5897 in what was a shortened trading day because of the New Year holiday.

The CAC 40 in France bucked the trend as legal opposition to the country's controversial plan to tax the rich at 75%, helped add value.

While Germany's DAX is closed, the Dow Jones will be open for business on Wall Street later as Democrats and Republicans begin their final push for a deal to avert the fiscal cliff.

Dow Futures currently point to a higher opening after five days of falls despite a deal palatable to both sides remaining elusive.

US Senate Majority Leader Harry Reid said he has made a counter-offer to a Republican proposal put forward on Saturday but later admitted "serious differences" remain.

The two sides have reportedly moved closer on tax increases while Republicans have indicated they could withdraw a contentious proposal to slow the growth of social security retirement benefits.

Mitch McConnell and Harry Reid still heading in different directions

Senate Republican leader Mitch McConnell said he had asked Vice President Joe Biden to become involved in a last-minute effort to reach an agreement.

He added that there was no single issue blocking an agreement but that "the sticking point appears to be a willingness, an interest, or courage to close the deal."

"I'm willing to get this done, but I need a dance partner," Mr McConnell said.

Both the Senate and the House of Representatives now have little time to debate and then pass a deal that has eluded the White House and Congress for weeks.

President Obama, who called congressional leaders to the White House on Friday, addressed the crisis once more as he appeared on NBC's Sunday morning talk show Meet the Press.

The President said Republicans were unwilling to see tax rates raised for the richest taxpayers.

"They say that their biggest priority is making sure that we deal with the deficit in a serious way," Mr Obama said.

"But the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected.

"That seems to be their only overriding, unifying theme," he added.

If a compromise can be found, the two parties will then decide whether to put it to the vote on New Year's Eve in the Senate and then the Republican-controlled House of Representatives.

President Obama has pressed lawmakers to clinch a deal, even if they must reach a compromise that lacks the significant deficit-reduction measures both sides had sought.

"I was modestly optimistic yesterday, but we don't yet see an agreement," the President told NBC in the interview recorded on Saturday. "And now the pressure's on Congress to produce."

At least one senior Republican said he was optimistic of a deal, and a "political victory" for Mr Obama.

Senator Lindsey Graham told Fox News that the odds are "exceedingly good" a deal can be done.

"I don't think people want to go over the cliff," he said.

The US is facing the fiscal cliff because tax rate cuts dating back to George W Bush's presidency expire at the end of the year.

Mr Obama originally insisted on letting the tax cuts expire on households earning more than $250k (£154k) but later upped that threshold to $400k (£246k).

The pending reductions in spending, which will hit everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut America's soaring deficit.

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