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Sky wins landmark fraud battle

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Broadcasting giant BSkyB has won a long-running dispute with technology firm Hewlett Packard (HP) for fraudulent misrepresentation after the “woeful” performance of its £48m software programme.

Software supplier Electronic Data Systems (EDS), which was bought by HP in 2008, has been found liable after its ‘overselling’ of a Customer Relationship Management (CRM) system in 2000.

BSkyB investors were told that the CRM was “proven leading-edge technology” but the reality was that its reliability, costs to install and drain on resources was never revealed until after the pricey contract had been signed.

HP is expected to challenge the Technology and Construction Court’s ruling which could cost up to £200m in compensation, although BSkyB originally sought £709m in compensation, on the grounds that EDS was forced into an untenable position by BSkyB bosses.

Billed as one of the most expensive and drawn-out disputes ever seen in the technology sector, BSkyB brought several accusations against EDS and HP, but the only charge in agreement is that of fraud by misrepresentation.

“I find that there was liability on the first defendant (Hewlett Packard) to the claimant (BSkyB) for fraudulent misrepresentation giving rise to damages,” Mr Justice Ramsey said.

Speaking after the ruling, HP vowed to challenge BSkyB’s award.

“This is a legacy issue, dating back to the EDS business in 2000, which HP inherited when it acquired EDS in 2008,” said a company statement. “We are pleased the Court dismissed the majority of the allegations made. While we accept that the contract was problematic, HP strongly maintains EDS did nothing to deceive BSkyB. HP will be seeking permission to appeal.”

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Written by Andrew Hodges

February 4, 2010 at 6:05 pm

Posted in Comment, LinkedIn

Tagged with ,

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