Former Computer Associates CEO Faces New Indictment

Sanjay Kumar, Computer Associates International Inc.’s former chief executive, paid $3.7 million in 2003 to buy the silence of a businessman who threatened to report an improper transaction, a new indictment alleges.

Kumar authorized the “consulting agreement” after company executives met the unidentified businessman in Hawaii, a meeting that took place while federal authorities were investigating the company, according to an indictment filed in Brooklyn, N.Y., that supersedes earlier charges against the former executive.

The meeting was set up after the businessman warned Kumar of “future consequences” if the company did not “adequately compensate” him, the indictment alleges. Kumar approved the payment “despite the fact that CA did not need, and never used, the consulting services,” according to the new indictment.

Computer Associates disclosed the superseding indictment in a 10-K report to the Securities and Exchange Commission issued Tuesday.

Kumar, 43, was originally indicted in September and charged with orchestrating a $2.2-billion accounting fraud at Islandia, N.Y.-based Computer Associates, the world’s fifth-biggest software maker. Kumar pleaded not guilty to the charges.

His indictment capped a two-year probe that yielded guilty pleas from five former Computer Associates executives, including Steven Woghin, the former general counsel.

Woghin was one of the executives who negotiated the payment to the unnamed businessman while in Hawaii, the indictment alleges.

Computer Associates signed a $27-million license agreement with the businessman’s company in March 2000, in what was essentially an improper “swap” agreement, the indictment alleges. Computer Associates agreed at the same time to purchase a software program from the man’s company in a “similar dollar amount,” according to the indictment.

The businessman threatened to go to authorities after saying his company entered into the licensing agreement as a “favor” to Computer Associates, the indictment alleges.

Attorneys for Kumar noted in a statement that prosecutors previously dropped charges relating to almost 100 of the 165 contracts Kumar is alleged to have negotiated prematurely.

“Nine months after the original indictment, the government continues to search for some activity by Mr. Kumar which may be actionable,” they said. “Mr. Kumar remains confident that he will be acquitted at trial, in spite of these strenuous efforts by the government and others to discover some crime that he committed.”