Islandia, N.Y. (April 22, 2004) -- Computer Associates International Inc. chairman and chief executive Sanjay Kumar is the latest casualty of the accounting scandal that has embroiled the software giant.
Following rampant speculation about his future at the beleaguered firm, which has been under investigation by the U.S. Attorney's Office and by the Securities and Exchange Commission for past accounting practices, Kumar stepped down as chairman and CEO and resigned from the board. Instead, he took on a new position as chief software architect.
“The changes in Sanjay's role are not based on the conclusion that he engaged in any wrongdoing. Nonetheless, the conduct in question occurred during his tenure, and the board felt this action was appropriate," Ranieri said in a statement Wednesday.
Lewis Ranieri, who has served as the board's lead independent director since 2002, has been elected chairman of its board of directors, the company announced. The board said that it will launch a search for a new CEO and expects to name an interim CEO shortly. Ranieri is the founder of Hyperion Partners LP and Hyperion Partners II LP (Hyperion) and chairman or director of various Hyperion entities.
Media speculation about Kumar's future at the troubled firm, which has said that it prematurely recognized revenue from software license contracts back in 2000, peaked after guilty pleas earlier this month by three former CA employees, including former chief financial officer Ira Zar. The trio pled guilty to federal charges, including conspiracy to obstruct justice and conspiracy to commit securities fraud. In addition, the trio settled civil fraud charges with the SEC.
On Monday, CA fired nine employees in its legal and finance departments as a result of issues raised during an investigation by the board's audit committee into the company's accounting practices. The terminations included four employees in the legal department and five in the finance department. Eight of the employees were based in CA headquarters in Islandia, N.Y. One was based in Atlanta.
The firm's audit committee, headed by former SEC chief accountant Walter P. Schuetze, said earlier this week that it is close to completing its investigation and its assessment of whether the firm will need to restate prior financials.
-- WebCPA staff
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