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.
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