Ex-CA CEO sentenced to 12 years in prison


Sanjay Kumar, the former chief executive officer of Computer Associates International Inc., was sentenced Thursday to 12 years in prison and a US$8 million fine on securities fraud charges.

In April Kumar and Stephen Richards, former worldwide sales head at the company, now known as CA Inc., both pleaded guilty after they were accused of obstruction of justice and fraudulent accounting practices, including falsely reporting hundreds of millions of dollars in revenue for licensing agreements during fiscal quarters in which the deals had not yet been finalized.

Kumar faced a sentence of up to 20 years in prison.

The former CA CEO remains free on bond while U.S. District Court Judge I. Leo Glasser decides how much restitution he will order Kumar to pay to victims, according to a spokesman for the U.S. Attorney’s Office for the Eastern District of New York. The judge will decide the restitution amount within 90 days, the spokesman said.

At least one Canadian commentator believes Kumar was dealt with leniently by the American courts. “He got a deal,” said Richard Powers, assistant dean of the Rotman School of Management at the University of Toronto.

Powers said the former chief executive of CA, received a relatively light sentence because he chose to cooperate early with authorities.” I think the message here is clear. Plead guilty, don’t waste the court’s time and you’ll get off easy.”

While 12 years may not seem a light sentence, the Toronto-professor said Kumar still fared better than the likes of Bernie Ebbers, Canadian-born CEO of the former Worldcom “who basically got a life sentence” and Jeffrey Skilling, CEO of Enron who received a 24-year-sentence.

Powers said Kumar’s situation might be likened to that of David Radler, former lieutenant of Conrad Black who received a 37-month jail term and US$250,000 fine in exchange for cooperating with authorities.

In early 2000, Computer Associates had signed a $44.5 million license deal with a nearly insolvent customer in which it had an ownership stake, according to court records. It then back-dated the contract so it could be recorded in the prior quarter. In the next quarter, CA reversed the revenue in its internal records but did not publicly restate its results. Powers said the fraudulent operations eventually involved US$2.2 billion

CA spokeswoman Jennifer Hallahan said the sentencing is “another step” in putting the company’s past behind it.

“We are a dramatically different organization than we were more than two years ago, when Mr. Kumar left the company,” she said. “We’re focused on building a strong company to the benefit of shareholders, customers and employees. We’ve been careful to put in place an infrastructure that promotes integrity, compliance and good governance.”

The company is working on the return of any “ill-gotten gains” from former executives, Hallahan added.


Related Download
Improving the State of Affairs With Analytics Sponsor: SAS
Improving the State of Affairs With Analytics
Download this case study-rich white paper to learn why data management and analytics are so crucial in the public sector, and how to put it to work in your organization.
Register Now