Mike Lynch, Founder and Chairman of Autonomy Corporation, poses for photographers at an awards ceremony in central London March 13, 2008.

LONDON | Fri Dec 28, 2012 8:32am EST

LONDON (Reuters) - Mike Lynch, the founder of the software firm sold to Hewlett-Packard last year in a deal tainted by accusations of accounting fraud, said he would defend the company's accounts to U.S. Federal investigators.

HP confirmed in a filing late on Thursday that the U.S. Department of Justice was investigating Autonomy's books.

The PC and printer maker bought the British company for $11 billion last year to lead its push into the more profitable software sector.

Autonomy did not deliver the growth expected, resulting in Lynch's departure earlier this year.

But worse was to come last month when HP wrote off some $5 billion of the company's value and accused its former management of accounting improprieties that inflated its value.

The Silicon Valley company said it had passed information from a whistleblower to the U.S. Department of Justice, the SEC and Britain's Serious Fraud Office.

"On November 21, 2012, representatives of the U.S. Department of Justice advised HP that they had opened an investigation relating to Autonomy," it said in the filing.

"HP is cooperating with the three investigating agencies."

Lynch launched a robust defense of his track record almost immediately after HP made the accusations.

He said on Friday that he was still waiting for a detailed calculation of HP's $5 billion writedown of Autonomy's value and a published explanation of the allegations.

"Simply put these allegations are false, and in the absence of further detail we cannot understand what HP believes to be the basis for them," he said in a statement.

"We continue to reject these allegations in the strongest possible terms. Autonomy's financial accounts were properly maintained in accordance with applicable regulations, fully audited by Deloitte and available to HP during the due diligence process."

Lynch said he had not been approached by any regulatory authority, but he would co-operate with any investigation and looked forward to the opportunity to explain his position.

HP has refused to concede to Lynch's demands for more information about the allegations.

"While Dr. Lynch is eager for a debate, we believe the legal process is the correct method in which to bring out the facts and take action on behalf of our shareholders," it said in response to an open letter from Lynch last month

"In that setting, we look forward to hearing Dr. Lynch and other former Autonomy employees answer questions under penalty of perjury."

(Reporting by Paul Sandle; Editing by Helen Massy-Beresford)

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WASHINGTON | Thu Dec 20, 2012 6:05pm EST

WASHINGTON (Reuters) - The White House on Thursday came to the defense of former Republican Senator Chuck Hagel against critics who have attacked his record on Israel and Iran in a bid to head off his possible nomination as President Barack Obama's next Pentagon chief.

With Hagel considered a leading choice for defense secretary, the administration joined allies rallying to support him against the onslaught, led by some pro-Israel groups and neo-conservatives, but also including former colleagues on Capitol Hill.

It was the second time since Obama's re-election last month that the White House has found itself forced to defend a Cabinet candidate who has yet to be nominated for anything, a source of frustration for the president's advisers.

Obama's aides have been preparing for a realignment of his national security team, possibly by Friday, sources familiar with the process have said. But with Obama focused on the "fiscal cliff" standoff and the Hagel controversy also fueling concerns, an announcement could easily be delayed.

Some American Jewish leaders contend Hagel, who left the Senate in 2008, at times opposed Israel's interests, voting several times against U.S. sanctions on Iran, and made disparaging remarks about the influence of what he called a "Jewish lobby" in Washington.

White House spokesman Jay Carney made clear Obama's faith in the former lawmaker, who is a decorated Vietnam war veteran.

"Senator Hagel fought and bled for his country. He served his country well. He was an excellent senator," Carney said, without acknowledging that Hagel was under consideration to succeed Defense Secretary Leon Panetta. He did not address any of the specific criticisms aimed at Hagel.

The controversy over Hagel's possible nomination comes after U.N. Ambassador Susan Rice withdrew from consideration for secretary of state last week amid withering attacks from Republicans over her role in initial explanations of the deadly September assault on the U.S. consulate in Benghazi, Libya.

"We've been through this before with Ambassador Rice where there's an effort to go after somebody," Carney said.

The drumbeat of criticism against Hagel could prompt Obama to reconsider whether it would be worth the likely Senate confirmation battle. But the White House has given no sign of dropping him the president's short list.

Obama himself has been criticized by some Jewish leaders for his approach to close U.S. ally Israel, especially given his strained relations with Prime Minister Benjamin Netanyahu.

BATTLE LINES DRAWN

Some of the attacks on Hagel stem from comments he made to former U.S. diplomat Aaron David Miller for his 2008 book, "The Much Too Promised Land," in which Hagel was quoted as saying, "The Jewish lobby intimidates a lot of people up here."

Senator Lindsey Graham of South Carolina, a member of the Armed Services Committee, said earlier this week that Hagel would "have to answer for that comment" if he is nominated.

William Kristol of the conservative Weekly Standard wrote in a recent column that Hagel "has anti-Israel, pro-appeasement-of-Iran bona fides."

Hagel's supporters have started firing back, insisting he has shown himself supportive of Israel and tough on Iran.

"His views are strong, solid on American foreign policy. I'm amazed at the turnout of the neo-cons and so on," Brent Scowcroft, national security adviser under President George H.W. Bush, told Reuters.

He was referring to the neo-conservatives, a loose group of right-wing foreign policy thinkers who gained ascendancy during the tenure of Obama's Republican predecessor, George W. Bush.

And Jeremy Ben-Ami, president of J Street, a liberal American Jewish group, denounced what he said was a "smear campaign" against Hagel.

Democratic presidents have sometimes turned to Republicans to fill key national security posts. Former President Bill Clinton chose former Senator William Cohen to lead the Defense Department, and Obama kept Robert Gates, former President George W. Bush's last defense secretary, on board for part of his term.

QUESTIONS ON CUBA

Florida Republican Senator Marco Rubio's office said he also would have questions about Hagel's record on Cuba, and raised the possibility of putting a hold on his nomination. Hagel has voiced doubts about the wisdom and effectiveness of maintaining the decades-old U.S. trade embargo on communist Cuba.

"Promoting democracy in Latin America is a priority for Senator Rubio, and he's put holds on other administration nominees over the issue," said Rubio spokesman Alex Conant.

"If President Obama were to nominate Senator Hagel for a cabinet position, I'm sure we would have questions about Cuba positions." Rubio is Cuban-American.

Adding to the sense of battle lines drawn, Hagel's critics and allies are circulating dueling fact-sheets on Capitol Hill.

Many Republicans consider Hagel suspect. He was an early dissenter on the Iraq war - an issue that helped Obama rise to prominence - and crossed the aisle to endorse the president in his successful re-election bid this year.

Since leaving the Senate after two terms, he has also been a vocal critic of his own party's fiscal policies.

Obama is said to feel comfortable with Hagel. The two traveled together to the Middle East during the 2008 campaign. Hagel currently co-chairs Obama's Intelligence Advisory Board.

(Additional reporting by Steve Holland and Warren Strobel; editing by Todd Eastham)

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U.S. Federal Reserve Chairman Ben Bernanke talks at the Economic Club of Indiana in Indianapolis October 1, 2012.

TOKYO | Sun Oct 14, 2012 3:03pm EDT

TOKYO (Reuters) - Federal Reserve Chairman Ben Bernanke on Sunday said it was far from clear that the U.S. central bank's highly stimulative monetary policy hurts emerging economies, defending a policy raising concerns in China, Russia and Brazil.

In a blunt call for certain emerging economies to allow their currencies to rise, he also said that foreign exchange intervention encouraged destabilizing inflows of foreign capital, but he did not specify China by name.

"The perceived advantages of undervaluation and the problem of unwanted capital inflows must be understood as a package - you can't have one without the other," Bernanke said in Tokyo.

Bernanke has often defended Fed actions against domestic critics, who argue the policy of keeping interest rates near zero while ramping up asset purchases hurts savers and risks future inflation.

But in the Tokyo speech, Bernanke addressed critics abroad, saying stronger growth in the United States bolsters global prospects as well, countering the likes of Brazil's Finance Minister Guido Mantega who has labeled the Fed's latest stimulus effort "selfish".

Critics say the Fed's unorthodox policies weaken the U.S. dollar and boost the currencies of developing countries, hurting their ability to export.

"It is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies," Bernanke said at an event sponsored by the Bank of Japan and the International Monetary Fund. While the speech was delivered in private, the Fed provided a text to the media.

Restating a theme that he has addressed in the past, the Fed chief also said that if emerging economies stopped intervening and allowed their currencies to rise, this would help insulate their financial systems from external pressure.

"Under a flexible exchange-rate regime, a fully independent monetary policy, together with fiscal policy as needed, would be available to help counteract any adverse effects of currency appreciation on growth," Bernanke said.

The Fed last month announced a new program of open-ended bond purchases that will be continued until there is substantial improvement in labor market conditions, barring a sustained and unexpected spike in inflation.

To start off, the central bank will buy $40 billion in mortgage-backed securities per month.

"This policy not only helps strengthen the U.S. economic recovery, but by boosting U.S. spending and growth, it has the effect of helping support the global economy as well," he said.

FRIEND OR FOE

In 2010, when the Fed launched its second round of monetary policy stimulus, known as quantitative easing, many finance ministers around the world accused the United States of pursuing a beggar-thy-neighbor policy.

Criticism of the current round of bond purchases, known as QE3, has been more muted, but nonetheless evident.

Brazil's Mantega told the IMF's 188 member countries in Tokyo on Friday that the policy was "selfish" and harming emerging markets both by stealing their share of exports and by spurring destabilizing capital flows and currency movements.

"Advanced countries cannot count on exporting their way out of the crisis at the expense of emerging market economies," he told the IMF's governing panel. "Brazil, for one, will take whatever measures it deems necessary to avoid the detrimental effects of these spillovers."

In opening remarks at the conference that Bernanke addressed on Sunday, IMF chief Christine Lagarde said aggressive steps by the Fed, the European Central Bank and the Bank of Japan were "big policy actions in the right direction."

But she took note of the distress those policies were causing elsewhere and called for central banks to step-up their dialogue and cooperation.

"Accommodative monetary policies in many advanced economies are likely to entail large and volatile capital flows to emerging economies," she said. "This could ... lead to (economic) overheating, asset price bubbles and the buildup of financial imbalances."

Critics of the Fed's policy, both foreign and domestic, contend it is likely to do little to help the U.S. economy, while risking unwanted inflation.

Central banks "should consider draining excessive liquidity injected into the market and eliminate inflationary pressure in the long-term," People's Bank of China Governor Zhou Xiaochuan was quoted as saying by the official state news agency Xinhua, which cited the Journal of Public Research, a PBOC magazine.

Russia also is worried.

"Everything is getting done, from my perspective, blindly, without regard to the consequences it could have," Russian Finance Minister Anton Siluanov told reporters in Tokyo.

"NO PANACEA"

For his part, Bernanke stressed that inflation in the United States was projected to run below the Fed's 2 percent goal over the next few years.

And while he admitted that QE3 was "no panacea," he argued the open-ended nature of the third round of bond buying makes the program more flexible and should make people feel more certain that U.S. economic growth, which registered a paltry annual pace of 1.3 percent in the second quarter, will pick up.

"An easing in financial conditions and greater public confidence should help promote more rapid economic growth and faster job gains over coming quarters," Bernanke said.

In response to the financial crisis and deep recession of 2007-2009, the Fed cut overnight interest rates to near zero and bought some $2.3 trillion in mortgage and U.S. Treasury securities to try to stimulate spending and boost employment.

U.S. job growth remains lackluster, but the unemployment rate did fall to 7.8 percent in September, its lowest in nearly four years.

For Bernanke, what is good for the world's largest economy is ultimately good for the world as well.

"Assessments of the international impact of U.S. monetary policies should give appropriate weight to their beneficial effects on global growth and stability," he said.

(Writing by Pedro Nicolaci da Costa in Washington and Tim Ahmann in Tokyo; Additional reporting by Anna Yukhananov in Tokyo and Alister Bull in Washington: Editing by Theodore d'Afflisio)

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