VideoCA's CEO Says Accounting is Cleared
Computer Associates (CA) CEO Sanjay Kumar said an independent review commissioned by the company's outside directors found the software giant did not violate accounting rules.
Speaking to a group of fund managers and shareholder activists at the Council of Institutional Investors' Fall Conference, Kumar reportedly said the review by PricewaterhouseCoopers -- under the direction of Computer Associates board member Walter Schuetze -- unearthed no irregularities. The review apparently covered CA's accounting of the third and fourth quarters of fiscal 1998. Kumar added that accounting used for the period ended March 1998 followed Generally Accepted Accounting Principals. (CA's cost management could stand some improvement, however.)
Law enforcement officials are reportedly investigating whether Computer Associates inflated its results so that top executives could cash in $1.1 billion of stock options. Those options were reportedly linked to the performance of the company's stock price during that period.
"PwC has concluded in its study that they, PricewaterhouseCoopers, have found no accounting irregularities or violation of GAAP," Kumar told the audience, according to Reuters.
The report has been turned over to the SEC and the U.S. Attorneys Office, Kumar said.
Stay tuned.
Xerox Treasurer Facing Probe
Xerox treasurer Greg Tayler, along with several other people involved with the company's financials, could face a civil charge related to an investigation by the SEC into the copier maker's accounting practices, according to The Wall Street Journal.
Xerox has already settled this case with the commission.
The Journal, citing people familiar with the criminal investigation, said FBI agents, working with the U.S. Attorney's Office, recently questioned James Bingham, a former assistant treasurer at Xerox. Bingham claims he was fired for trying to rein in unethical accounting at the company.
Information provided by Bingham was said to be crucial to the SEC's civil case against Xerox. Earlier this year, management at the document specialist agreed to pay a $10 million fine and restate the company's financial results dating back to 1997.
Despite the settlement, the SEC has reportedly issued Wells notices to Xerox's former accountant, KPMG, plus a number of former and current KPMG and Xerox employees. Such notices mean recipients could still face civil charges.
In addition to Tayler, previously unidentified Wells receivers include Philip D. Fishbach, a former Xerox controller, and Daniel Marchibroda, a former assistant controller, according to The Journal.
The SEC's case is separate from any federal criminal probe. The article in the Journal points out that there is no indication that any of the Wells-notice recipients are targets of the federal inquiry.
According to the SEC, in November 1999 former Xerox CFO Barry Romeril told senior Xerox management that when accounting actions were stripped away, Xerox had essentially "no growth" through the late 1990s.
Bingham, the onetime assistant treasurer at Xerox, has reportedly charged that Xerox canned him in 2000 after he repeatedly questioned the company's accounting practices.
Bingham reportedly told the SEC in depositions that Xerox's culture in the late 1990s was one in which accounting trickery was routinely used to conceal deteriorating underlying results. In fact, E-mails sent by Bingham in mid-2000 are credited with uncovering the entire scandal.
For its part, Xerox management has tried to portray Bingham as a disgruntled former employee.
Xerox's accounting problems were initially thought to be an isolated problem at its Mexico unit. However, in mid-2000 Bingham apparently sent an E-mail to his boss, then-treasurer Eunice Filter, warning that Xerox's accounting problems extended beyond Mexico.
According to published accounts of a wrongful-termination suit brought by Bingham, Filter told him not to distribute it, asking whether he "wanted people to go to jail."
Bingham then apparently sent the E-mail to Xerox's current chairwoman and CEO Anne Mulcahy, as well as Romeril. But Filter's assistant ordered him to recall and "destroy" it, according to the Journal's account, citing an internal message.
Xerox called the directive to destroy the message an "unfortunate selection of words," noting that Filter wanted first to investigate the allegations before forwarding them to her bosses. Filter called Bingham's allegation "inaccurate."
Disney Board Approves Governance Changes
Whether it felt the pressure of institutional investors or the winds of corporate change, management at Walt Disney took another step toward better corporate governance yesterday.
The reeling media giant didn't take action on shrinking the size of its board or improving the independence of that body. It did increase the size of its corporate governance and nominating committee, however, appointing board members Judith Estrin and Monica Lozano.
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