Hewlett-Packard is doubling down on its story about accounting irregularities at Autonomy, a company it acquired last year. Today it said it is preparing legal action against the company’s former executives, most of whom it dismissed early this year. Possibly there is some factual justification for Hewlett-Packard’s huge allegations, but as days go by and no such information comes to light, in spite of journalists’ ready access to many of the company’s former employees, it adds weight to the presumption that there is no basis for the accusations. If a company was recording its revenue two times over, which is what Hewlett-Packard’s write-down implies, every employee must have had some indication of this, and any auditor would have discovered it early on.
There are penalties for a company making baseless allegations against its own people, and among the most serious is a loss of credibility in the stock market. The tough talk about a criminal case that so far doesn’t exist hasn’t done much to bolster Hewlett-Packard’s stock, down 2.9 percent today and by more than half from its February peak. If Hewlett-Packard does file a case against its former employees, Hewlett-Packard’s board members and executives will then be legally obligated to answer questions, and then we may actually get to the bottom of this story.