Former CA chief pleads guilty

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The former chief executive officer of Computer Associates, on Monday pleaded guilty to charges that he engineered a $2.2bn accounting fraud at the software group and then tried to cover up his crime.

The plea by Sanjay Kumar, a protégé of Charles Wang, the company’s founder, was made just two weeks before the former executive was due to stand trial after being accused in a 2004 indictment of securities fraud, obstruction of justice and lying.

“My conduct was wrong. I take responsibility for parti-cipating in this practice and I apologise for my actions,’’ Mr Kumar told a judge.

Mr Kumar’s rise to the top ranks of CA, as it is now called, was guided by Mr Wang. Both men came under scrutiny after paying themselves $1.1bn in restricted stock in 1998.

Monday’s admission brings to an end a long-running investigation into Mr Kumar’s involvement in an “35-day month” accounting scheme that CA used between 1998 and 2001 to extend financial reporting periods in order to beef up company revenues.

The company entered an 18-month deferred prosecution agreement in 2004 amid accusations about its accounting practices and paid a $225m penalty to avoid prosecution.

Among other charges, the government accused Mr Kumar of reformatting his computer to run the Linux operating system to clear out the computer’s memory, in spite of prosecutors having begun their investigation and the company having ordered employees to retain any relevant evidence.

Mr Kumar was also charged with paying $3.7m to a customer who threatened to expose him for taking part in a sham software transaction.

Stephen Richards, a former CA sales executive, also entered a guilty plea yesterday on the nine-count indictment.

Both men face sentencing on September 12.

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