CA terminates nine employees

Wei Gu

NEW YORK: Computer Associates International Inc., mired in a long-running federal criminal probe into its accounting, said it fired nine employees as a result of an internal investigation into its bookkeeping.

The software maker dismissed four employees in its legal department and five in its finance department, effective immediately.

Four former senior finance executives, including its former Chief Financial Officer Ira Zar, pleaded guilty to three criminal charges including securities fraud earlier this year.

Computer Associates fired its general counsel, Steven Woghin, this month after the SEC said Woghin had instructed a former finance executive to answer questions from an outside law firm with half-truths and vague answers.

"This is a step in the right direction - investors will view it positively," Trip Chowdhry, an analyst at FTN Midwest Research, said of Monday's announcement.

Chairman and Chief Executive Officer, Sanjay Kumar said in a statement the management team is focusing on business at hand as it has in the past months.

Kumar, who has not been charged with any wrongdoings, served as president during 2000 when the company booked $1.4 billion in sales early.

Its board will meet on Tuesday to discuss the probe, according to a source familiar with the matter. It will be discussing the fate of Kumar, according to The New York Times, which first reported the meeting.

The company has said it is possible the ongoing government investigation could result in charges against it and additional company officers.

"I don't think the news today rules out any potential further actions by CA," said Gregg Moskowitz, an analyst with Susquehanna Financial Group.

Computer Associates also said it has submitted a response to a Wells Notice from the U.S. Securities and Exchange Commission, which is conducting a civil investigation into the software maker's accounting practices.

A Wells notice is a formal request for information that indicates the government may take enforcement action against the company.

The Islandia, New York-based company said its audit committee was nearing completion of its internal investigation and its assessment of whether a restatement of prior financial statements is necessary.

Investors have said they want to see a resolution as early as possible.

"The most important thing is a resolution," said an analyst for an investment management company, which owns shares of Computer Associates. "How it is resolved is secondary to getting this issue behind."

© Reuters