Business Ethics and Corporate Governance, Second Edition

MINI CASE 3: TRICKING INVESTORS FOR PERSONAL GAIN

Former CEO of Computer Associates, Sanjay Kumar was indicted in September 2004 for manipulating finances illegally. Along with Stephen Richards (former head, worldwide sales), Kumar, admitted to fraudulent business practices, such as backdating contracts to show inflated sales and earnings and hence trying to meet analysts expectations. This resulted in a misstatement of revenues to the tune of US$ 2 million. Kumar admitted to flying to Paris to personally sign a contract and backdating the same. He also encouraged this practice within his business unit. Business development managers under him enjoyed millions of dollars of bonuses for meeting their targets using this method. When prosecutors ...