Feeds

CA mulls suing co-founder Wang over accounting fraud

Biting the hand that nurtured it

Boost IT visibility and business value

CA may pursue its co-founder, Charles Wang, for damages resulting from a $2.2bn accounting scandal following the publication of internal report that alleges Wang "directed and participated" in a scheme to artificially inflate the software firm's stock price.

The report, by a committee of outside directors at CA, advises that Wang and senior executives around him cooked up CA's infamous "35-day month" ruse. The scheme involved backdating sales so as to fraudulently inflate revenues in closed quarters in order to meet Wall St expectations, boosting CA's "profits" and bonuses for senior executives in the process. The report advises CA to sue Wang and the senior execs around him for $500m in damages. It also calls for action in order to force Wang to hand back stock he received during as tenure between 1976 and 2002 in charge of the enterprise software giant, then known as Computer Associates.

Executives blamed for the scandal include Sanjay Kumar, Wang's longterm protege and successor as chief exec in 2002, who was recently jailed for 12 years after admitting his involvement in the scam. The study was prepared at the request of CA's current management as part of its defence against lawsuits brought by disgruntled investors who lost out as a result of the fraud.

"Mr. Wang was the direct cause of the 35-day month practice, both due to his actual conduct and the culture that he established, and that it existed for most, if not all, of his tenure as CEO," the report concluded, Newsday reports.

Wang denies the accusations of accounting fraud contained in the report. "This fallacious report does not serve the best interest of shareholders, customers and employees," he said. He suggested the report was based, at least partly, on unreliable information from Kumar. "I find hard to understand how the special litigation committee could believe the information they were given was credible, when their sources are those who perpetrated the crimes at issue and then lied about them to both internal company investigators and the government," he said.

Newsday quotes unnamed sources "familiar with the criminal investigation" as reporting there was never enough evidence to press charges against Wang.

Far from being the architect of one of the largest fraud in corporate America, Wang portrays himself as a victim. "As the founder of CA, I am devastated by what has happened to the company and feel personally wronged by Sanjay Kumar and the management team he installed," he said. ®

Build a business case: developing custom apps

More from The Register

next story
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.