Computer Associates Accepts Fine

Sanjay Kumar addresses a New York news conference Monday, Aug. 7, 2000. Computer Associates International Inc. agreed Wednesday, Sept. 22, 2004, to pay $225 million to shareholders as part of a settlement that allows it to avoid criminal prosecution in a multibillion dollar accounting scandal.
AP
Former Computer Associates International Inc. chairman and chief executive Sanjay Kumar has been charged with securities fraud, conspiracy and obstruction of justice in connection with a multibillion dollar accounting scandal at the software company.

The charges unsealed Wednesday, after the company itself agreed to pay $225 million to shareholders as part of a settlement that allows it to defer criminal prosecution. That agreement also settles securities fraud charges brought by the Securities and Exchange Commission.

A 10-count grand jury indictment returned last Friday also charges Kumar with conspiracy to obstruct justice and levies the same charges against Stephen Richards, the company's former head of worldwide sales.

Under the highly unusual deal to defer prosecution, an outside monitor will track Computer Associates' financial reporting for the next 18 months.

Deputy Attorney General James Comey said the deferral will "give the company the opportunity to demonstrate that it has a culture that can be saved. Our focus is not on doing harm for harm's sake."

"If they don't take those steps, the consequences will be severe," Comey added.

Also Wednesday, the company's former general counsel, Steven Woghin, pleaded guilty in federal court to conspiracy to commit securities fraud and obstruction of justice.

Computer Associates, the world's fourth-largest software maker, restated its financial results from 2000 and 2001 in April to reflect $2.2 billion in revenue that was improperly booked.

Three former executives admitted that month that they fraudulently recorded hundreds of millions of dollars worth of contracts in a conspiracy to inflate quarterly earnings.


By Frank Eltman