Former CA chief admits to fraud charges

Former Computer Associates chief executive Sanjay Kumar has pleaded guilty to criminal charges, admitting that he led a $2.2bn accounting scandal at the company. Kumar's former sales executive Stephen Richards also pleaded guilty. 

Both men were charged with illegally inflating revenues at the management software vendor over fiscal 2000 and 2001.

CA held the financial period open after the end of a fiscal quarter to recognise revenue from contracts that were not executed at that time. The practice is known in the accounting world as the '35 day month'.

The company admitted to the practice in April 2004 after an investigation by the US Securities and Exchange Commission. The investigation led to Kumar's ousting in June 2004 and obliged the vendor to pay a $224m fine.

Kumar had previously pleaded not guilty, but changed his plea after prosecutors found out that the executive had wiped his hard drive shortly after the government launched its investigation, thereby disposing of any evidence.

Inflating the revenues helped Kumar and fellow executives meet requirements for lucrative bonus packages based on stock performance.

The judge has yet to make a ruling on a sentence. Kumar is also facing a civil lawsuit from the Securities and Exchange Commission.