Wyly’s fight over CA returns to court

Ilaina Jonas

NEW YORK: Texas billionaire Sam Wyly took his fight for control of Computer

Associates International Inc. back to the Federal court on Monday, filing more

counter claims in response to the company's suit against him.

Wyly and his company, Ranger Governance Ltd., accused the world's No. 4

software maker and its top managers of failing to disclose to shareholders that

one of its board members was also a director of troubled software maker Lernout

& Hauspie Speech Products NV, according to the claim filed in U.S. District

Court Eastern District of New York.

The beleaguered Belgian-based speech technology software maker is struggling

from an accounting-based fraud scandal that landed its co-founders and managing

director in jail, forced the company to seek bankruptcy protection, and wiped

out $10 billion in shareholder value.

In June, Wyly launched a fight to wrest control of Islandia, New York-based

Computer Associates and oust Chairman Charles Wang and Chief Executive Sanjay

Kumar. Wyly is asking investors to reject the 10 current board members up for

election and replace them with a slate Wyly has chosen. The new board could then

fire Wang and Kumar.

Shareholders are expected to elect a board at the company's annual meeting on

August 29.

GETTING THE LAST SOUND-BITE

"You can't go on just alleging anything," Wang told Reuters.

"A lawsuit is not bad. It's another way of doing it. And send a press

release out fast on it. And do it close to 5 o'clock. I think what he's hoping

for is getting the last sound-bite."

According to the counter claim, which also names Wang and Kumar as

defendants, Roel Pieper became Lernout & Hauspie vice chairman in June 2000,

was appointed to the L&H's executive committee in August that year and was

named chairman in November 2000. He resigned from L&H in January, 2001.

"We didn't think about," Wang said. "He was brought in only to

try to deal with the big mess they had. He was one of the people instrumental in

looking at the whole thing."

Before Computer Associates filed its annual proxy statement, its board

members in June were asked to list other companies with which they were

affiliated. Pieper was no longer with L&H at that time.

Last month, Computer Associates filed a lawsuit against Wyly, accusing him of

smearing the company's reputation and questioned his legitimacy to wage the

fight. Wyly filed his first response to the suit on July 9.

The claim reiterates issues that have been raised throughout the campaign:

management's more than $1 billion compensation package its managers awarded

themselves, about a quarter of which a court ordered returned to the company. It

also criticizes the company's controversial new accounting structure.

"To have these kind of allegation and crazy things he throws around just

to get votes, we're going to fight this thing," Wang said. "We're

fighting and fighting hard."

DISAPPEARING SURVEY

In this most recent legal action, Wyly also accused Computer Associates of

mischaracterizing its relationship with customers. Again, the suit compares the

company's study to one Wyly commissioned.

Although the claim refers to the Penn, Schoen & Berland Associates Inc.

study Wyly commissioned, it has been taken down from Ranger's Web site. It also

does not appear in Ranger's proxy, despite Wyly's criticism of Computer

Associates for not including its own study in its proxy statement.

"This is a direct reaction to what has happened to the survey he

had," Wang said, adding that he believes the Securities and Exchange

Commission inquiries about the study were behind Ranger's omission of its study.

"This is maybe better than politics, this election. We've really got to

deliver. We have to have some facts behind us."

When asked if that was true, a Ranger representative said: "Given that

we are confident that the CA survey confirms the results of the Ranger survey,

we felt that there was no need for a continuing debate about the efficacy of our

study."

An SEC spokesman said the agency does not comment on "specific

transactions."

Computer Associates' report by GuideStar Communications showed that about 10

percent of chief information officers from large companies said they felt they

had a constructive, collaborative or better relationship with Computer

Associates and more than half said they wanted such a relationship, according to

a copy of the study Reuters obtained.

The study also revealed that while about two thirds of large company clients

were likely to renew product licenses and service contracts, only a third said

they were likely to buy new products or services.

"In general, year-to-year findings suggest that satisfaction with CA

products and services has increased," the survey said, adding the increase

was the result of more sales contact with managers.

The report recommends the company increase its contacts with CIOs and strive

to become a partner, understanding what the company's needs are and selling

products and services that fill those needs.

(C) Reuters Limited 2001.