CA’s Kumar gets 12 years in jail

3 Nov 2006

The former chief executive of Computer Associates (CA) Sanjay Kumar has been jailed for 12 years for fraud. Kumar’s rise to prominence from being a poor immigrant from Sri Lanka to heading up one of the world’s biggest software firms was originally hailed as the “embodiment of the American dream”.

Kumar was sentenced yesterday at a Brooklyn court for masterminding and covering up a US$2.2bn accounting fraud at CA. As well as being jailed for 12 years he was fined US$8m.

“His cupidity calls for a meaningful sentence,” US District Court I. Leo Glasser said yesterday.

Kumar pleaded guilty last April to charges of conspiracy, fraud and obstruction of justice.

US federal prosecutors estimated that the fraud cost CA shareholders US$3bn.

Kumar emigrated to the US at the age of 15 but by the age of 40 had risen swiftly to head up a Fortune 500 software company.

He stepped to become the company’s chief software architect in April 2004 after the company admitted it had backdated contracts.

Only a week later CA restated US$2.2bn in revenue, which was the amount of revenue prematurely booked.

Kumar was indicted in September 2004, only a day after CA agreed to pay a US$225m fine. 15 other CA executives were indicted or fired for the fraud and seven executives have pleaded guilty.

Kumar’s sentence falls short of some of the more harsher sentences for corporate fraud to come in the post-Enron crackdown of recent years.

Former WorldCom CEO Bernie Ebbers got 25 years, former Enron CEO Jeffrey Skilling got 24 years and Dennis Kozlowski, former chairman and CEO of Tyco International, got 25 years.

By John Kennedy