Computer Associates Chief Steps Down

As a federal criminal investigation into securities fraud and obstruction shifts in his direction, Sanjay Kumar, resigned yesterday as Computer Associates’ chairman and chief executive, the New York Times reported.

The fourth-largest independent software company, CA is based in Islandia, NY. With his resignation, Kumar becomes the latest in a string of chief executives to be caught in the crossfire as accounting scandals have rocked U.S. companies. Kumar will be replaced as chairman by Lewis Ranieri, an investment banker and company director, the company said, adding it will soon embark on a search for a new chief executive.

Kumar, a 17-year Computer Associates employee, is not leaving the company entirely. Rather, he will step into the newly created position of chief software architect. The Times reported that he is a prominent Long Island resident and a part owner of the New York Islanders hockey team, along with Charles B. Wang, CA’s former chairman.

The company employs more than 16,000 people and has more than $3 billion in sales, specializing in mainframe utility software designed to ensure the efficiency of large computers used by corporations, the Times reported.

The Securities and Exchange Commission has been conducting a joint investigation of the company for more than two years and four of its former executives have pled guilty to securities fraud or obstruction of justice charges since the beginning of the year.

One of those who pled guilty was former Chief Financial Officer Ira H. Zar, who is cooperating in the investigation. Zar reported directly to Kumar. The Times reported that a plea deal is rarely struck with an executive as highly placed as Zar unless they are helping to make the case against a more senior executive.

Ranieri said in a statement yesterday that the company’s internal investigation had not uncovered wrongdoing by Kumar. "The changes in Sanjay's role are not based on the conclusion that he engaged in any wrongdoing," Ranieri said. "Nonetheless, the conduct in question occurred during his tenure, and the board felt this action was appropriate."

The Times reported that some analysts believe the CA board has not done enough to oversee Kumar.

"Either Mr. Kumar had something to do with the wrongdoing all along, or he is negligent in the most serious way for not knowing that his whole legal department and finance department were busily concocting a criminal act," Nitsan Hargil, a software analyst at Friedman Billings Ramsey, told the Times.

You may like these other stories...

IRS must take oath on Lerner emails: judgeMackenzie Weinger of Politico reported on Thursday that a federal judge ordered the IRS to explain under oath how it lost emails connected to Lois Lerner, the ex-IRS official at the...
The Republican-controlled House of Representatives passed a bill on Friday morning that would permanently extend the bonus depreciation tax break for businesses.The measure, HR 4718, which was crafted by Representative Pat...
The Republican-led House of Representatives is expected to pass a bill this week that would permanently extend the bonus depreciation tax break. But don’t expect President Obama to sign it.The Obama administration said...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.