Core Summary

  • The UK Financial Reporting Council (FRC) announced on Thursday (July) sanctions against Sushovan Hussain, former chief financial officer of UK software supplier Autonomy, in connection with his 2018 fraud conviction in the United States.
  • Under a settlement agreement with the FRC, Hussain agreed to accept a 20-year ban from membership of the Institute of Chartered Accountants in England and Wales (ICAEW), retroactive to 2018. The disgraced former CFO also agreed to pay £450,000 to cover the investigation costs of the FRC's Executive Counsel in this matter.
  • The FRC said in a statement: "The long-term exclusion reflects the seriousness of the misconduct, which has been confirmed by the fraudulent offenses in the US criminal conviction. This misconduct has seriously damaged public confidence in the standards of members' conduct and brought shame to the accounting profession."

Detailed Background

The FRC said the settlement relates to misconduct by Hussain following his conviction in the US in April 2018 on 16 counts of fraud. After conviction, Hussain was sentenced to five years in prison and ordered to pay approximately $10 million in fines.

The conduct alleged against Hussain in the criminal case related to Autonomy's sale to Hewlett-Packard in 2011 for approximately $11.7 billion.

Before being acquired by HP, Autonomy was incorporated in England and Wales and had dual headquarters in the US and the UK.

The US Department of Justice said at the time that Hussain, a UK citizen and resident, had artificially inflated Autonomy's revenue over more than two years before the sale to make it appear to be growing when it was not. The DOJ said Hussain used backdated contracts and other forms of accounting fraud to inflate Autonomy's publicly reported revenue by up to 14.6% in 2009, 17.9% in 2010, 21.5% in the first quarter of 2011, and 12.4% in the second quarter of 2011.

Case Proceedings

The UK accounting regulator said the case led the FRC to file a complaint against Hussain in May 2018, but it was subsequently paused while Hussain appealed the conviction. Meanwhile, Hussain agreed to a temporary order suspending his ICAEW membership. Ultimately, his appeal was unsuccessful.

In Thursday's statement, the FRC said Hussain admitted that the criminal conviction constituted misconduct, violating "the fundamental principle of acting with integrity in the ICAEW Code of Ethics." Under the settlement, he is barred from working as an accountant in the UK until November 2038.

Regulatory Decision

The FRC's Executive Counsel considered that, given the "significant overlap" between the regulator's complaint and the findings of the US criminal conviction, it would not be in the public interest for the matter to be considered by a UK disciplinary tribunal.

The FRC said in the statement: "Therefore, the Executive Counsel relied solely on the US criminal conviction to establish misconduct."

Hussain could not be immediately reached for comment at the time of writing.