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Judge denies CA's request to pursue Wang's
fortune
BY
MARK HARRINGTON | mark.harrington@newsday.com
October 10, 2007
CA Inc.'s plan to pursue the fortune of founder Charles
Wang sustained a body blow after a federal judge denied the company's
request for a clarification or a carve-out in a 2003 shareholder settlement
that shields former executives from being sued for the $2.2 billion
accounting scandal.
In a sharply worded decision, U.S. District Judge Thomas Platt told CA it
missed the chance three years ago to alter the settlement agreement, and
that he would not allow the company or its board to "railroad this court" by
attempting to extend a one-year statute of limitations on opening the
settlement.
The software company argued in a Sept. 27 letter to Platt that it had proper
standing to file for the request. That filing was written by lawyers for CA
at Sullivan & Cromwell, which conducted a separate inquiry for the CA board
audit committee in 2003 that led to charges against then-chief executive
Sanjay Kumar and others, but not Wang.
In his ruling, Platt noted that lawyers for Texas tycoon
Sam Wyly had sent a letter in 2004 to then-CA chief executive Kenneth Cron,
urging the company to join in Wyly's efforts to invalidate the no-sue clause
in the shareholder settlement. Platt said that the letter was "well within
the one-year statutory time frame," and that the company apparently didn't
pursue it.
More recently, CA had sought a partial opening of the 2003 settlement to
pursue Wang, former chief financial officer Peter Schwartz and select others
who have not settled claims with the company. A special litigation committee
for the CA board in a report released in April alleged that the men directed
and took part in fraud and cover-up at CA.
Wang and Schwartz, who were never accused of criminal wrongdoing in the
government's case or the audit-committee probe, have denied any
improprieties.
Wang was interviewed by lawyers for Sullivan & Cromwell, and a report on
their findings is said to have found no evidence he participated in the
accounting fraud or obstruction.
"If they had something they felt was wrongdoing [on Wang's part], they would
have gone to the government and made claims. They didn't," said a lawyer
familiar with the case who asked not to be identified.
Wyly for years has asked the court to grant him the right to pursue claims
against several current or past board members and executives, including
Wang.
Ross Albert, a partner at Morris Manning & Martin in Atlanta and a former
special counsel for the Securities and Exchange Commission, took note of
Platt's "strong language" in the ruling in concluding there's little chance
Platt would overlook the statute of limitations. "I suspect there will be
further litigation and appeals," he said.
It's unclear what course CA may take in light of Platt's decision, or
precisely why the statute of limitations issue wasn't foreseen. A hearing in
the case is scheduled for later this month.
"We are awaiting the final hearing on the decision and considering all of
our options, including potential appellate remedies," a CA spokeswoman said.
"We remain committed to aggressively pursuing our rights on behalf of
shareholders and utilizing all of the options available to us."
Platt noted that Wyly's company, Ranger Governance, which was denied a
request to invalidate the no-sue clause in an Aug. 2 ruling, already has
appealed his decision to a higher court, and thus "this court is divested of
jurisdiction to amend or clarify" the order.
William Brewer, an attorney for Wyly at the firm Bickel & Brewer, said
Platt's ruling leaves CA with few choices: "Either they join Ranger in
supporting its appeal to reverse the dismissal, or they walk away from the
claims, which it knows it should have pursued some years ago."
Asked if CA would join in Wyly's appeal, the CA spokeswoman said, "Make no
mistake, CA holds the best interests of shareholders and the company as its
priority."
Investment banker Gary Lutin, who has followed the CA saga through a
shareholder forum, said, "The judge has made it very clear that whoever is
responsible for the company's interest - whether the board or lawyers -
hasn't done their job."
Copyright © 2007,
Newsday Inc.
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