Computer Associates International Inc. officials were duped by their own lawyer into releasing former executives from financial liability in the wake of massive fraud, according to an outspoken investor who now wants the Islandia, N.Y., software makers help in overturning a 2003 settlement.
In a letter dated Oct. 15, Sam Wyly, the head of Dallas-based investment advocate Ranger Governance Ltd. and a longtime critic of the accounting practices at CA, asked CA Chairman Lewis Ranieri to “join Ranger Governance in seeking relief from the settlements and join in pursuing the return of ill-gotten gains achieved by the CA executives previously released.
“CA has committed publicly … that it will seek return of the compensation improperly paid to executives as a result of the fraud,” read the letter, a copy of which was viewed by eWEEK. “The best way for CA to fulfill this promise is to seek a court order voiding the releases in the settlement.”
Of the half-dozen CA executives named in his letter, Wyly singled out former CA General Counsel Stephen Woghin, saying he withheld vital documents from investigators and from lawyers for CA and the shareholders as the parties mulled a $100 million settlement in August 2003. That settlement allowed the executives, including Woghin, to keep their salaries and bonuses and released them from financial liability.
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The documents, which included incriminating e-mail messages exchanged between former executives, were submitted to the court after the settlement was signed, Wyly stated. According to Ranger officials, shareholders are owed more than $1 billion in salaries and bonuses paid to executives involved in the accounting scandal.
Woghin is facing up to 25 years in prison after pleading guilty in September to conspiracy to commit securities fraud and obstruction of justice. His sentencing was set for Dec. 10.
CA officials declined to comment on Wylys request except to say they are cooperating with federal prosecutors to recoup money paid to former executives.
The relationship between Wyly and the present CA administration remains tense as Wyly continues to press for an overhaul of the companys management.
One area where both Ranger and CA agree is in the need to move beyond the governance issues and get back to serving customers weary of the internal turmoil.
Nick Aldinger, LAN consultant and IT support technician for the Idaho State Controllers Office, in Boise, said CA can ill-afford any more missteps lest users seek alternatives. “I think this is a wake-up call,” Aldinger said. “[Further mistakes] would be devastating, and wed have to start looking at other options.”