Kumar pleads not guilty fraud allegations

By siliconindia staff writer   |   Friday, 24 September 2004, 07:00 Hrs
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NEW YORK: Sanjay Kumar, former CEO of New York-based software giant Computer Associates, has pleaded not guilty to charges of defrauding investors by fudging records.

Kumar made the plea before the US Securities and Exchange Commission, which announced a 10-count indictment against him and several top former executives for cooking the books to show the company was doing better than it actually was for the two years 1999 and 2000.

The company has already agreed to shell out some $225 million to shareholders in a settlement that would pre-empt criminal prosecution.

But the Sri Lanka-born Kumar is, meanwhile, having to face charges of securities fraud and conspiracy to obstruct justice, all of which he has denied.

The amount of revenues that Kumar and his associates are allegedly supposed to have over-counted comes to more than $2 billion.

The practice they allegedly adopted was to extend each "quarter" by a few days in order to be able to count into that quarter agreements with clients that had not yet been completely closed.

The 45-page indictment says that Kumar, along with his associates, "routinely extended" the company's fiscal quarters, "normally for three business days".

The 42-year old Kumar appeared before US District Judge I. Leo Glasser in New York to deny the charges. Kumar had to submit his passport and post a bail of $5 million. He is scheduled to return to court Nov 23.

The company's current chairman, Lewis Ranieri, said in a statement: "We fully support the government's efforts to bring all responsible parties to justice. In addition, we will do everything in our power to help the government recover unjust enrichments."

The company has to make several payments of $75 million to total the $225 million in restitution to shareholders under the supervision of an independent monitor.

Several company executives have admitted to inflating the books.

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