Former Tory chairman David Davis has criticised the US-UK extradition treaty. This follows the acquittal of British entrepreneur Mike Lynch.
Lynch was cleared of charges related to inflating the value of his company, Autonomy, during its sale to Hewlett-Packard (HP).
Lynch’s Acquittal and Davis’ Comments
Davis stated that the acquittal is a “real clear demonstrator of how ridiculous” the extradition treaty is. He suggested it has a “chilling effect” on British companies considering sales to American buyers. Davis warned that any sale to an American company is seen by the American Department of Justice to fall under American regulations, regardless of where the sale occurs.
The 2003 treaty, designed to streamline the extradition process for serious offenders, was used to extradite Lynch, 58, over alleged fraud in Autonomy’s sale to HP. Davis, a longstanding critic of the treaty, expressed concerns that British entrepreneurs could face biased legal battles in the US long after their business dealings.
After a three-month trial in San Francisco, Lynch was acquitted late Thursday night. Reflecting on the trial, Davis remarked, “I would be very cautious of any deal if I was a British tech entrepreneur…”
Historical Context and Other Notable Cases
Other notable cases under the treaty include the extradition of David Bermingham, part of the “NatWest Three” linked to the Enron scandal. He served 37 months in a US prison.
Davis highlighted that most US federal cases, about 97%, are resolved through plea bargains, potentially coercing individuals into guilty pleas.
Autonomy, founded by Lynch in 1996, specialised in analysing unstructured data from various sources. HP acquired the company for $11 billion in 2011, aiming to integrate its software capabilities into their product offerings.
The Fallout from Autonomy’s Acquisition by HP
The deal soured, with HP accusing Lynch of financial manipulation to inflate Autonomy’s value. Lynch has consistently denied these accusations over the past 13 years.
Davis described the case as “daft,” saying, “You have a sale of a British company on a British stock exchange, bought by a European subsidiary of Hewlett-Packard…”
Following the acquittal, Lynch and Davis have pledged to address what they see as flaws in the extradition treaty. Senior business leaders have previously called for a halt to Lynch’s extradition, reflecting widespread concern within the business community.
Reaction from the Business Community
Brent Hoberman, founder of Lastminute.com, celebrated the verdict on social media, stating, “Great news for UK tech!” Many UK tech founders will be happy to see Lynch cleared.
Suranga Chandratillake, a partner at Balderton and former US CTO at Autonomy, added, “Mike Lynch is a remarkable technologist and entrepreneur…”
This case is the latest fallout from HP’s acquisition of Autonomy. Sushovan Hussain, Autonomy’s former finance director, was sentenced to five years in the US for fraud in 2019.
Further Legal Implications
Additionally, Deloitte, Autonomy’s auditor, was fined £15 million in 2020 for misconduct.
In a 2022 UK civil trial, Mr Justice Hildyard found that Lynch had indeed defrauded HP but noted that the acquisition might have proceeded even with adjusted financial figures due to the strength of Autonomy’s technology and client base.
Damages in this case are still pending.
The acquittal of Mike Lynch has sparked significant debate about the US-UK extradition treaty. Many argue that British entrepreneurs are at a disadvantage under the current system.
David Davis and other business leaders are now calling for reforms to protect UK citizens from what they see as a biased system. The business community will be watching closely to see if these changes are made.