Britain’s extradition treaty with the United States has a “chilling effect” on companies considering selling to American buyers, Sir David Davis has said.
The veteran Conservative MP said the acquittal of Mike Lynch, the British technology entrepreneur, in his American criminal trial was a “real clear demonstrator of how ridiculous” the extradition treaty is. “Any sale to an American company is plainly seen by the American Department of Justice to fall under American rules and regulations no matter where in the world it is.”
Davis, the Tory party’s prospective candidate for Goole & Pocklington in the forthcoming general election, has long campaigned over the issue of extradition.
Sir David Davis said the situation was “ridiculous” and that he would be “very cautious of any deal if I was a British tech entrepreneur”
EDDIE KEOGH/REUTERS
The present treaty, established in 2003, strengthened the ability of each country to extradite serious offenders and was used to extradite Lynch, 58, over an alleged fraud pertaining to the sale of his Autonomy business to Hewlett-Packard, the American technology group.
He was acquitted on all charges late on Thursday night after a three-month criminal trial in San Francisco.
• Mike Lynch: Britain’s Bill Gates defies the odds
Davis, 75, said: “I would be very cautious of any deal if I was a British tech entrepreneur because I would never know that five or ten years later I wasn’t going to be carted off to America to face a partisan case in a partisan court.”
Other businessmen extradited under the treaty have included David Bermingham, one of the so-called NatWest Three linked to the Enron scandal, who in February 2008 was sentenced to 37 months in prison.
The majority of US federal cases, about 97 per cent, are resolved through plea bargaining, where the accused agrees to a guilty plea, in exchange for a more lenient sentence.
David Bermingham was handed a 37-month prison sentence in 2008 over charges related to the Enron scandal
TOM PILSTON FOR THE TIMES
Founded by Lynch in 1996, Autonomy could analyse unstructured data contained in emails, phone records and voice recordings. In 2011, HP bought the company for $11 billion as it sought a software offering to boost its ailing computers business. At the time of the sale, Autonomy was the largest British software company and was highly profitable, holding cash reserves of $1.1 billion at the close of 2010 with FTSE 100 companies as customers.
The deal with HP quickly went sour and Lynch was accused of playing financial tricks to pump up its numbers. Over the past 13 years he has always protested his innocence.
The case was “daft”, Davis said, adding: “You have a sale of a British company on a British stock exchange, bought by a European subsidiary of Hewlett-Packard. They suddenly decide they’ve been defrauded after they sacked the chief executive who bought it. It was ridiculous.”
Davis spoke to Lynch shortly after the verdict came through and he said the billionaire entrepreneur had told him: “David, we’ve got work to do. We have to deal with this terrible treaty.” The pair agreed to catch up on the tycoon’s return to discuss the next steps.
Over recent years senior business leaders, including Sir John Rose, the former chief executive of Rolls-Royce, and Lord Stevenson of Coddenham, the former chairman of HBOS, have signed letters calling for a block to Lynch’s extradition.
Some within the British technology world welcomed the verdict. Brent Hoberman, the founder of Lastminute.com and executive chairman of Founders Forum, wrote on Twitter/X: “Great news for UK tech! Many UK tech founders looked up to Mike and will be happy to see him cleared.”
Suranga Chandratillake, Autonomy’s former chief technology officer, said it was better that Mike Lynch was going to be back in the UK and free to work on technology again
MATTHIAS BALK/ALAMY
Suranga Chandratillake, a partner at Balderton and the former US chief technology officer at Autonomy, said: “Mike Lynch is a remarkable technologist and entrepreneur. If this verdict means he’s back in the UK and free to start working on tech again, rather than worrying about legal briefs, I think that’s a great outcome for British technology and UK plc.”
This was the latest trial sparked from the fallout of the HP takeover. Sushovan Hussain, Autonomy’s former finance director, was sentenced to five years in prison in the US for fraud in 2019. In 2020 Deloitte, Autonomy’s auditor, was fined £15 million by the accountancy regulator over “misconduct” findings.
In 2022, in a UK civil trial, Mr Justice Hildyard ruled that Lynch had defrauded the Silicon Valley group to make revenues and gross profits appear healthier than they really were. However, he also found it was likely HP would have still considered the acquisition of Autonomy “even if adjusted to take account of the fraud” because of the strength of its technology and client base.
Damages in this case are yet to be decided.