Computer Associates (CA) former CEO and head of sales both added their guilty pleas to those of five other former company executives yesterday, admitting fraud, obstructing justice, and perjury.
Former CEO Sanjay Kumar and his head of worldwide sales Stephen Richards presided over a “systemic, company-wide practice of falsely and fraudulently recording and reporting…fiscal quarter revenue,” the US Attorney’s Office said in a statement.
Roslynn Mauskopf, United States Attorney for the Eastern District of New York, said the guilty pleas were the result of an investigation into “a culture of corruption and fraud at Computer Associates”.
Now under new management, CA said in an announcement: “We are a dramatically different organisation than we were two years ago, when both Mr Kumar and Mr Richards left the company.”
It had undergone a “transformation” and had put in place “infrastructure that promotes integrity, compliance and good governance”, with which it had made “significant progress”.
The guilty pair join other compadres, including a former chief financial officer and former general counsel, who have already admitted their part in the fraud.
The seven executives were charged with operating a “35 day” accounting month in order to cram their books with enough sales to meet sales forecasts. This was in 2000, a boom time for the computer industry.
Kumar and Richards also admitted lying to their lawyers about the fraud, and telling porkies to federal investigators when they came round asking awkward questions about proper accounting practices, probity, corporate governance, and such like.
Kumar is also charged with bribing someone with millions of dollars to prevent him reporting the fraud to the authorities.
Sentencing is scheduled for 12 September 2006.