FORTUNE – U.S. and UK taxpayers looking to spend some extra dollars on behalf of corporations during the holidays (and into next year) will be pleased to know that Hewlett-Packard's bungled acquisition of software firm Autonomy has made that possible.
Last week, HP asked both the SEC and the U.K.'s Serious Fraud Office to open investigations into possible accounting improprieties that may have occurred at Autonomy prior to HP's purchase of the firm in October 2011. Taxpayer resources at both the FBI and SEC are already at work.
On November 21, 2011, CEO Meg Whitman had touted Autonomy as HP's "priority #1, 2 and 3 for 2012." The entire current HP board, excluding new board member Ralph Whitworth, blessed the purchase. On November 20, 2012, Whitman announced an 85%, $8.8 billion write-down of the 2011 acquisition.
As last week's HP (HPQ) quarterly analyst call unfolded like a bad dream, Whitman set the beleaguered board's defense in motion. On the call and in follow up interviews on CNBC and Marketplace, Whitman fashioned her court-ready responses to questions on the board's culpability in a geek code. Not technology geek, but governance geek. The code word in this case? "Rely."
"We are disappointed by the news," Whitman told CNBC. But "that is what you do when you are on a board. You rely on the recommendations of management and the [audited] financials," she said. "I voted for this deal but we are where we are." Her carefully crafted words cast the board as the victim, wrapping it in a protective shield that directors most often use when they are sued.
Where was the board?
But reliance on management has its limits. Particularly in large transactions and M&A situations, boards need to take into account other views and carefully weigh alternatives. Before the deal closed in October 2011, HP chair Ray Lane appeared at an Information Week gathering. "Autonomy was the only answer," he said. "They are unique." More
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