Hewlett-Packard says the U.S. Department of Justice has opened an investigation related to its allegations that leaders at British software business Autonomy used shifty accounting to hoodwink H-P into buying the business. A DOJ public affairs officer could not immediately confirm H-P's assertion.

H-P booked an impairment charge of $8.8 billion when it recently filed its 10-K with the Securities and Exchange Commission for its fiscal year ended Oct. 31, 2012. H-P warned the market in late November that the impairment charge was coming based on its own internal investigation. The company concluded internally that accounting improprieties, misrepresentations to the market, and disclosure failures at Autonomy made the business look more profitable and more promising over the long term than it really was, causing the company to overpay. H-P also acknowledged that a big portion of the impairment charge stems from poor market performance and a decline in H-P's stock price.

Autonomy founder Michael Lynch has been aggressive in his defense of H-P's allegations, accusing H-P of stonewalling his requests for details and opening his own blog to defend himself and other former Autonomy managers. In Lynch's estimation, H-P's disclosures in its 10-K contain a watered-down version of the allegations it originally stated in late November. “It appears the company is back-tracking on a number of key points that under-pinned its original allegations,” Lynch wrote in his blog.

He also notes that while H-P says Justice opened an investigation in late November, he has not been contacted by anyone from the Justice Department or any other regulatory authority. “We will cooperate with any investigation and look forward to the opportunity to explain our position,” he wrote. “We continue to reject these allegations in the strongest possible terms.”

When H-P issued its warning of a massive impairment charge, the company said it believed Autonomy was overvalued as a result of misstatements about financial performance, including claims related to revenue, core growth rate, and gross margins. H-P said it believed Autonomy described negative-margin, low-end hardware sales as high-end software sales, and it inappropriately accelerated revenue recognition based on transactions with resellers. H-P called it a “willful effort” to inflate underlying metrics to make the company appear more attractive to investors and prospective buyers.

The Department of Justice has not verified that it has opened an investigation. H-P also referred its allegations to the Securities and Exchange Commission and the Serious Fraud Office in the United Kingdom.

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