Two international consulting firms that had earlier been named in a shareholder lawsuit filed against Hewlett Packard Co. have been given some respite. They have both been dropped from the lawsuit which had been filed by shareholders over HP’s disastrous acquisition of a British software firm.
The two consulting firms Deloitte Touche Tohmatsu and KPMG LLP have been dropped from the shareholder lawsuit filed after Hewlett-Packard completed its acquisition of software company, Autonomy. The shareholder lawsuit was filed last November.
In November last year, Hewlett Packard chief executive Meg Whitman announced that after the acquisition of Economy, the company had discovered several accounting irregularities at Autonym. As a result, HP was forced to take an $8.8 million write-down on the software deal.
According to Whitman, Deloitte Touche Tohmatsu had been responsible for the auditing of Autonomy’s financial records prior to the takeover and before the deal was finalized. Further, KPMG LLP had audited Deloitte’s work. She admitted that HP had specifically hired KPMG LLP to audit Deloitte’s work to be thorough, but both companies had failed to spot the irregularities. She however hasn’t confirmed who alerted the Board about these irregularities.
As expected, shareholders were livid over the deal which they believed was ill-thought out, and poorly planned. The shareholder lawsuit alleges that HP and the executive board failed to properly look at Autonomy’s financial situation before it agreed to the deal. This finally led to a complete overhaul of HP’s Executive Board, with longtime chairman Ray Lane stepping down this April. Other prominent members of the board resigned altogether.
However, both Deloitte Touche Tohmatsu and KPMG LLP have now been dropped in a consolidated complaint that was filed in May.