May 2010 Be the Year That Charles Wang Is Brought to Justice

Don Tennant

As 2009 draws to a close, we can all no doubt think of any number of tech-news headlines we wish we had read this year, but didn't. Near the very top of my list is this one: "Charles Wang Brought to Justice."

 

Wang is the co-founder and former CEO of the software company that under his watch was known as Computer Associates. As you probably know, that name became so toxic under his watch that the company was later forced to kill it and resurrect itself as CA. The tale of the company's financial accounting fraud and the toll it took on so many people's lives is a disheartening one, especially when you consider the injustice of it all. Sanjay Kumar, Wang's protege and successor as CEO, will ring in the New Year from his cell in a minimum-security prison in New Jersey, while Wang will be free to toast another year of success in beating the system with his real estate development cronies on Long Island. If laughter accompanies the clink of the glasses, it will be at the expense of Kumar, who's serving a 12-year sentence for securities fraud and obstruction of justice.

 

There were some positive developments relating to this case in 2009, most notably Kumar's decision to speak up against the mentor who had so shamelessly thrown him under the bus. Kumar stated in a legal affidavit filed in September that the backdating of sales contracts by means of the infamous 35-day month "was considered to be the way CA did business," and that Wang "personally directed the implementation of this practice.''

 

According to a November report by BusinessWeek, Wang's response to Kumar's claim was, "He's the one who pleaded guilty." Indeed he was. At least he had the courage to admit his wrongdoing and to be held accountable for his actions.

 

BusinessWeek noted that Kumar's testimony was a factor in prompting legal action by CA in October to recover some of the compensation it paid to Wang, including an outrageous performance bonus of something north of $600 million. Wang's derisive response to that development was, "What they've done is shameful. They should focus on the business and move on."


 

It's gratifying that CA is taking action against Wang, because it wasn't a given that it would subject itself to the hassle. In an interview conducted in the spring of 2007, I asked CA CEO John Swainson what in his view needed to happen for justice to be done with respect to Wang. As he gathered his thoughts to formulate a response, I could see that Swainson was genuinely torn. This is what he said:

"I don't know. And I say that very honestly. I do not know what should happen next. I think we've got to let the court [process] play out. On one hand, there's sort of this natural inclination for revenge. On the other hand, the company needs to put this stuff behind it and move on. I cannot tell you where the board will come out on this. This is clearly not a decision I will make by myself. It's a decision the board will make with due consideration of all the facts after the SLC [the CA board's Special Litigation Committee] report has been accepted."

It wasn't an easy decision to go after Wang. A strong argument could be made to "focus on the business and move on," as Wang so contemptuously put it. When I spoke with Swainson, I could see that he was concerned about being distracted from the company's focus on customers, which is exactly where it's been, and what has enabled CA to recover from the damage that was masterminded by Wang. Thankfully, the SLC could see that no focus is worth having without justice. May 2010 be the year that it's served in this case.



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Jan 3, 2010 11:53 AM R. Lawson R. Lawson  says:

"performance bonus of something north of $600 million. "

Just to put that into perspective, $600 million is enough to pay 300 engineers a $100,000 salary for 20 years.  Or 6,000 engineers $100,000 for one year.

Imagine what CA could do with 300 high quality engineers for 20 years!  Certainly more than this one CEO.  Pretend for a moment that he isn't a criminal (which requires quite an imagination).  If he were a saint, that type of bonus is stealing from the investors who no doubt had no say in the matter.

The job of the CEO and the board of directors is to act in the interest of the shareholders.  They should all be removed (actually, relocated to a maximum security prison) because Wang could not approve himself such a fortune.  Others were also complicit.

This happens all too often - usually with the excuse that "we can't attract the best with less".  What an insult to our collective intelligence!

Shareholders should approve every single executive compensation package.  Plain and simple.  It's our money, and we should have more control over it. 

These elitists truly believe they are a gift upon our society and they deserve to be compensated for their willingness to grace us with their presence.  They are a scourge on our society and they belong in prison.

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