Globes [online], December 10, 2008 article

CA probes irregularities at Israel branch

CA Israel CEO Aryeh Ofner and other senior local managers have been suspended.

Shmulik Shelah10 Dec 08 19:06

Alleged irregularities are being investigated at the Israeli branch of Computer Associates International (CA), one of the world's leading software houses. An audit has been conducted at the branch over the past two days, and at the same time, local senior managers have been barred from the company's offices in Herzliya. The managers concerned are CA Israel CEO Aryeh Ofner, Deputy CEO Danny Shemesh, and VP Finance Chaim Gitler. It is not clear at present how the affair will develop, but it is believed that the chances are that it will end with the local management leaving the company.

The affair began at the beginning of last week with an internal e-mail message to local staff informing them that Ofner and Shemesh were no longer in their posts and that they should report to regional management in Europe. On Monday morning, a team arrived in Israel that included the EMEA manager. CA, which is traded on Nasdaq at a market cap of $8.7 billion, develops and provides enterprise information systems management software.

Ofner has managed the local branch for nine years. He has been with the company since 1992, and is a respected manager. During his time in charge, CA has become a clear leader in the Israeli market against competition from HP, BMC, and IBM, with an annual turnover in the tends of millions of dollars, and 50-60 sales and support staff.

CA has expanded its Israeli activity through a number of acquisitions. Only a month ago, the company bought Eurekify and DFOcus for $40 million. Altogether, CA employs almost 300 people at its Israeli development center.

Like many companies on Wall Street, CA is highly sensitive to irregularities, particularly after the company joined the dishonorable list of companies coping with financial scandal at the beginning of the decade. Its former top managers Sanjay Kumar and founder Charles Wang were accused of aggressive accounting to the tune of hundreds of millions of dollars that enabled the company to report revenue and profits twice over and inflate its profits for the years 1995-1998. Kumar was convicted and sentenced to twelve years in prison in 2007.

The history of irregularities at Israeli branches of US information technology companies has seen the departure of the local sales manager at McAfee six months ago, and of senior managers at HP Israel in 2006.

Published by Globes [online], Israel business news - www.globes.co.il - on December 10, 2008