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Troubles for IT major Computer Associates International Inc keep rising.
The company fired nine employees -- five from its accounts department and four from its legal department -- on Monday following an internal investigation which indicated their involvement in an accounting fraud, The Wall Street Journal reported.
However, the company board will decide soon if the move to fire nine employees (five more were given the pink slip earlier), will help assuage shareholders and investors. Computer Associates Chairman and Chief Executive Officer Sanjay Kumar has said that his team is focussing on business at hand, but US prosecutors investigating the company are "focussing on whether Kumar knew about the systemic accounting fraud or the subsequent cover-up," said The Wall Street Journal.
Reports say that Kumar's fate could be decided by the board of directors at the meeting later on Tuesday.
The biggest fear for the firm's board of directors is that the entire company, not just some of its employees and executives, could be criminally indicted as US federal prosecutors are examining various issues to determine whether to charge the company.
A felony conviction for the corporation could have serious consequences -- such a conviction effectively killed the accounting firm Arthur Andersen LLP, and could result in ineligibility to participate in government contracts, a major loss for any technology vendor. If CA is indicted, it could be banned from government work even before the case is tried, said The Wall Street Journal.
One of the options before the CA board is to ask Kumar to step down until the investigation is over and his name is cleared. Kumar has not been charged with any wrongdoing.
The firing of nine executives on Monday suggests that the company is serious about taking remedial action.
"At another company Kumar might already have quit, but as CA's chairman he has managed to drive the company's stock price up and improve its relationship with its customers, thus fortifying his position, said The Wall Street Journal.
Kumar' strong position thus makes the task of the company's board that much more difficult to decide about his future. Kumar, said The Wall Street Journal, declined to comment.
Also, "Kumar has no heir apparent. Instead, he has dispersed authority broadly among his top managers, creating an executive team that numbers 18, many of whom are longtime CA insiders loyal to Kumar. There is no chief operating officer, and Kumar holds the titles of president, CEO and chairman," said the Journal.