Sir David Davis, former chairman of the Conservative Party, has sharply criticised the UK’s extradition treaty with the United States following the acquittal of British technology entrepreneur Mike Lynch.

Lynch was cleared of charges related to inflating the value of his company, Autonomy, in its sale to Hewlett-Packard (HP).

Davis stated that the acquittal is a “real clear demonstrator of how ridiculous” the extradition treaty is, suggesting that it has a “chilling effect” on British companies considering sales to American buyers. He warned, “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.”

The 2003 treaty, designed to streamline the extradition process for serious offenders, was used to extradite Lynch, 58, over alleged fraud in the 2011 sale of Autonomy to HP. Davis, a longstanding critic of the treaty, expressed concerns that British entrepreneurs could face biased legal battles in the US long after their business dealings.

After a three-month trial in San Francisco, Lynch was acquitted late Thursday night. Reflecting on the trial, Davis remarked, “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 notable cases under the treaty include the extradition of David Bermingham, part of the “NatWest Three” linked to the Enron scandal, who served 37 months in a US prison. Davis highlighted that most US federal cases, approximately 97%, are resolved through plea bargains, which could coerce individuals into guilty pleas.

Autonomy, founded by Lynch in 1996, specialised in analysing unstructured data from various sources. HP acquired the company for $11 billion in 2011, aiming to integrate its software capabilities into their product offerings. However, the deal soured, with HP accusing Lynch of financial manipulation to inflate Autonomy’s value. Lynch has consistently denied these accusations over the past 13 years.

Davis described the case as “daft,” elaborating, “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.”

Following the acquittal, Lynch and Davis have pledged to address what they see as flaws in the extradition treaty. Senior business leaders, including Sir John Rose and Lord Stevenson of Coddenham, have previously called for a halt to Lynch’s extradition, reflecting widespread concern within the business community.

Brent Hoberman, founder of Lastminute.com, celebrated the verdict on social media, stating, “Great news for UK tech! Many UK tech founders looked up to Mike and will be happy to see him cleared.”

Suranga Chandratillake, a partner at Balderton and former US CTO at Autonomy, added, “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 case is the latest fallout from HP’s acquisition of Autonomy. Sushovan Hussain, Autonomy’s former finance director, was sentenced to five years in the US for fraud in 2019. Additionally, Deloitte, Autonomy’s auditor, was fined £15 million in 2020 for misconduct.

In a 2022 UK civil trial, Mr Justice Hildyard found that Lynch had indeed defrauded HP but noted that the acquisition might have proceeded even with adjusted financial figures due to the strength of Autonomy’s technology and client base. Damages in this case are still pending.

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David Davis Criticises Extradition Treaty Following Mike Lynch Acquittal