Everything we know so far about the Mike Lynch superyacht incident
Mike Lynch, co-founder of British technology giant Autonomy and security firm Darktrace, has disappeared after Family yacht sunk off the coast of Sicily.
Lynch was acquitted of fraud charges a few weeks ago in a lengthy trial related to HP’s acquisition of Autonomy in 2011 after spending a year under house arrest in the United States.
In a bizarre twist of fate, his co-defendant in the case was killed in Cambridgeshire on Saturday when he was hit by a car while jogging.
The 185-foot sailboat, named Bayesian, belonged to Lynch’s wife, Angela Bacares. It was anchored off the Italian coast near Porticello, Sicily, when a storm hit early Monday morning. The boat was reportedly hit by a waterspout.
There were 22 people on board the yacht, including 10 crew members and 12 passengers, including Lynch, his wife and daughter. The other passengers were reportedly colleagues who had worked for Lynch.
At the time of writing, Bacares had been rescued from the wrecked yacht along with 14 other people. One body has been recovered, but six people remain missing, including Lynch and his teenage daughter, as well as Jonathan Bloomer, chairman of Morgan Stanley International Bank, and Chris Morvillo, a lawyer with Clifford Chance.
Divers continue to search for the wreck 50 meters below the surface.
Who is Mike Lynch?
In 1996, Lynch founded the unstructured executive search firm Autonomy with David Tabizel and Richard Gaunt and took on the role of CEO. In 2011, HP acquired Autonomy for $11 billion, at the time the largest purchase of a British technology company. Lynch is said to have earned $800 million from the sale – but the sale sparked a flood of litigation.
A year later, HP wrote down $8.8 billion of Autonomy’s value, arguing that it had intentionally inflated its value, and called for an investigation into “serious accounting irregularities, disclosure errors and outright misrepresentations at Autonomy.”
Lynch has always denied the allegations and pointed out at the time that HP had 300 people available for the due diligence review: “That would have been a pretty big elephant that would have been overlooked.”
The UK’s Serious Fraud Office initially investigated, but in 2015 decided there was insufficient evidence and handed the case over to US authorities. In 2018, Sushovan Hussain, Autonomy’s chief financial officer, was sentenced to five years in prison for fraud. Shortly thereafter, Lynch and Chamberlain were charged with fraud in the US.
HP also filed a civil suit in the UK; Lynch filed a countersuit. In 2022, the UK High Court ruled that Autonomy was liable for part of HP’s losses, marking a victory for the company.
The final damages have yet to be decided, but HP has reduced its civil claims to $4 billion and Lynch intends to appeal the ruling.
On the same day as the UK High Court ruling, and after years of debate over extradition rules, Lynch was finally granted extradition to the US to stand trial on fraud charges. Lynch travelled to the US in May 2023 and spent a year under house arrest.
In March of this year, the case finally went to trial – 13 years after the sale. Lynch was charged with 16 counts of fraud and conspiracy, and faced decades in prison; Chamberlain was charged with 15 counts. After weeks of evidence, Lynch and Chamberlain were found not guilty.
His legal team argued that Lynch simply had no knowledge of any wrongdoing within the company, but had focused on the technological side.
Lynch said at the time: “I am looking forward to returning to the UK and getting back to what I love most: my family and innovation in my field,” he said.
A serial entrepreneur
Autonomy wasn’t Lynch’s only technology success. Two years after the sale to HP, Lynch’s investment firm Invoke Capital funded the creation of security firm Darktrace, founded with Autonomy and Invoke employees, which uses AI to detect security threats in corporate networks.
Lynch’s problems with Autonomy followed him to the security firm. In 2021, UBS withdrew from an IPO of Darktrace because of ties to Lynch.
Last year, Darktrace investors opposed the appointment of a Lynch representative to the board ahead of the U.S. fraud trial, and this year announced that Invoke’s stake had fallen below the amount that guaranteed a board seat.
Private equity firm Thoma Bravo offered $5 billion to acquire Darktrace in April. According to Reuters, Darktrace shares have underperformed due to the allegations against Lynch.
