Todays nytimes reports that sanjay kumar and stephen richards, former heads of computer associates admitted to “conspiracy to inflate the company’s sales and interfere with the federal inquiry” which included sanjay paying 3.7m to buy off one witness.
My own experience with CA was during my tenure as ceo of an enterprise sw company in the late 90’s. It always felt like I was dealing with the mafia (which I’ve found true at some other companies too.) I always called the company a figment of wall streets imagination. We never encountered them in the marketplace. Our customers had given up on their flagship unicenter product years earlier.
Now its great that these two execs have admitted guilt and some justice will be served but the bigger points for me are a) that these guys don’t have to return their wealth (which includes owning a pro hockey team) to the injured investors and b) that the founder and former chairman, charles wang, still walks totally free with all his illbegotten gains.
Course the age old refrain is that this didn’t happen on his watch. I say first that I don’t believe this is all rogue subordinates like fastow from enron. Come the fuck on! We are seeing the results of corporate cultures that foster numbers at all costs, that as long as you don’t break the law or get caught its all ok.
This isn’t about a few bad apples. The whole fucking forest is infected. This isn’t about teaching ‘ethics’ for 4 weeks at harvard b school. Where are the cries for reform? Oh, maybe sanjay or CA bought them off too.
10 % of US public corporations restated earnings last year. How many do you think revised upward?
So now sanjay and his partner face 20 yrs. Are they a threat to society? Do they deserve that? I don’t give a shit about either of these guys. I say let them buy the years down. What’s 20 years of your life worth? whatever you can afford to pay.
If the SEC would just enact my proposed rule – that insiders have to disgorge profits from stock sales made during periods of fraud – this would be a mere formality. We wouldn’t need a trial. Wouldn’t have to prove guilt. Mr wang would be contributing his half of the islanders too.
Common mr levitt, wouldn’t you like to own your own pro hockey team?
Many people (like my dad) believe that sarbanes oxley will stop this type of curruptiuon in the future. How? What would sanjay have done differently? Would a more independent board have somehow figured out he was inflating sales? Maybe, but I don’t buy it. Boards read carefully prepared statements and ceo’s can easily convince them of just about anything.
One lesson we should all learn from watching ceo pay skyrocket is these guys care more about their personal wealth than anything else. So let’s talk the lingo they get, money! Ill bet the 80 % prospect of losing all their money will be a bigger deterent than the 1 % prospect of jail time.
Having attended hbs, I can attest there is nothing an hbs trained ceo, banker or consultant cares about more than money.
Sent wirelessly via BlackBerry from T-Mobile.