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Note: The committee report referenced in the article below concluded that until June 2003 CA directors had consistently failed to take "action in situations where, although action was not required to satisfy their fiduciary duties under Delaware law, it nonetheless might have benefited the Company and saved it from further harm." For a copy of the report, see: Report of CA Board's Special Litigation Committee
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Business
Criminal case against CA ends
Judge dismisses deferred prosecution without charges
BY MARK HARRINGTON
Federal authorities yesterday officially
closed the book on the case against CA Inc., ending a nearly three-year
deferred prosecution agreement without charging the company.
In a ruling yesterday, U.S. District Court Judge I. Leo Glasser in federal court in Brooklyn granted the government's request to dismiss the criminal information filed against CA in 2004. The action ended possible charges the Islandia-based software company faced as a result of a $2 billion criminal stock fraud conspiracy by former executives. Eight of the officials, including former chairman and chief executive Sanjay Kumar, pleaded guilty to charges including securities fraud and obstruction of justice.
The move marks a milestone for the company.
"This is a good one to put behind us," chief executive John Swainson said in an interview last night. The move officially ends the role of Lee Richards, the attorney appointed as independent examiner of CA during the deferred agreement. In reaching the end of the agreement, CA complied with more than a dozen conditions of the Sept. 22, 2004, deferred prosecution agreement by the U.S. attorney's office in Brooklyn. Among other things, it required the company to set up a $225 million restitution fund to compensate damaged shareholders, acknowledge past misdeeds, reform its internal controls and add independent directors. Swainson said the company had accomplished most of the objectives more than a year ago. The examiner's tenure had been extended once while the company finalized internal controls reform last year. Swainson said full global implementation of its enterprise resource planning systems could require another three years' work, though it is complete for North America. The agreement required only that CA begin implementing it. Swainson acknowledged that one other issue related to the past remains. Last month, a special litigation committee of CA's board released a report about past practices at CA that placed much of the blame for misdeeds on co-founder and former chairman Charles Wang. A Delaware court is reviewing the report, which calls for pursuing claims against Wang and others. Wang in a statement called the report "fallacious" and denied any wrongdoing. "That is sort of the last vestige" of the past, Swainson said yesterday. Meanwhile, he said, the company has instilled discipline and cultural changes that prevent a repeat performance. "I think we've substantially changed the way [our] people think about the business," he said. "I think those changes are permanent changes." A spokesman for the U.S. attorney's office declined to comment.
Copyright Newsday Inc.
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