A special litigation committee of the CA board of directors has recommended that the claims against Mr Wang be “vigorously pursued by CA using outside counsel”.
The claims relate to accounting irregularities over many years that ultimately led the company – then known as Computer Associates – to a US$2.2 billion restatement of its financials. Criminal charges were then laid against senior executive management.
The special committee litigation committee was formed in early 2005 by the CA board as a response to on-going criminal and civil suits related to the financial restatement.
The committee says in its report that it had investigated “a massive accounting fraud perpetrated by the company’s senior-most executives from as far back as the late 1980s through 2001, and their cover-up of that fraud, which lasted through 2004.”
At the core of the investigation was an accounting practice called the “35-day month” that the company used to inflate its revenue numbers for any given reporting period.
The special litigation committee also recommended that it use the courts to have “special releases” – or immunities from prosecution – that had been granted to Mr Wang in 2000 and 2003 be set aside.
The also committee said it had reached a binding agreement with former chairman and chief executive Sanjay Kumar under which he will pay CA US$15.25 million (A$18.3 million). This is in addition to the US$52 million that Mr. Kumar will repay to CA’s shareholders as part of his criminal restitution proceedings.
Kumar was late last year sentenced to 12 years jail for his role in the fraud. In announcing the further US$15.25 million settlement, the CA committee said that following Kumar’s restitution agreements with government, he has no material assets left.
The litigation committee makes a series of other recommendations to sue other senior executives, most notably former chief financial officer Peter Schwartz.
Mr Wang has said he would defend himself, laying the blame for the financial fraud at the feet of Kumar.
“I find it hard to understand how the Special Litigation Committee could believe the information they were given was credible, when their sources are those who perpetrated the crimes at issue and then lied about them to both internal company investigators and the government," Mr Wang said in a prepared statement reported by Reuters.
Mr Wang had stepped down as CEO in 2000 and retired as chairman of the CA board in 2002.
The special litigation committee recommended that all claims against its current executive vice-president of products Russell Artzt, saying it had uncovered no evidence that he had directed or participated in the “35-day month” scheme.
It reached an agreement, however, under which Mr Artzt is to pay the company US$9 million, being the value of executed share options.
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