Cambridge software firm under fire

A software company in Cambridge accused of lying about its finances to Hewlett-Packard - the American company which bought it for more than £7bn last year - has denied the claims.

HP has alleged former members of Autonomy's management misled potential buyers over the company's real value.

An inquiry was launched after a whistleblower at Autonomy came forward with the allegations, which have been denied by the former managers. The case has now been referred to the Serious Fraud Office.

Hewlett-Packard says it remains committed to Autonomy despite claims it had been mislead by former staff at the Cambridge software firm.

In a statement, HP said it was "extremely disappointed" by the findings of its internal investigation.

It added actions of former staff:

After the PwC investigation, HP now believes that Autonomy was "substantially overvalued" at the time of its acquisition due to the mis-statement of Autonomy's financial performance.

HP has referred the matter to the Serious Fraud Office, US Securities and Exchange Commission's Enforcement Division and is preparing to seek compensation against various parties.

HP wrote off $8.8 billion US dollars in its fourth quarter earnings, with the majority linked to "serious accounting improprieties, misrepresentation and disclosure failures" discovered by an internal investigation.

The inquiry, run by accountancy firm PwC, was launched after a whistleblower at Autonomy approached HP with the allegations.

Bosses at computer giant Hewlett-Packard took a £5.5bn hit after accusing former staff at a Cambridge software company it bought last year of misleading investors.

HP bought Autonomy in a £7.1 billion deal that saw its founder Dr Mike Lynch pocket around £500 million.

The American firm alleges that former members of Autonomy's management fiddled accounts in a bid to "mislead investors and potential buyers" and has referred the matter to the Serious Fraud Office (SFO).