Deposed CEO Kumar clarifies his new role

Since Sanjay Kumar's ouster last month as Computer Associates International's (CA) chief executive officer, customers have been left wondering about the role the popular executive will play at the company he no longer leads.

Since Sanjay Kumar's ouster last month as Computer Associates International's (CA) chief executive officer, customers have been left wondering about the role the popular executive will play at the company he no longer leads.

Kumar and several other CA officials, including interim CEO Ken Cron, addressed that issue this week in a meeting with a small group of reporters at the start of CA World, the company's annual customer conference, in Las Vegas.

Kumar's new title is chief software architect, a position Cron described as an envoy to customers. CA's technology strategy will be led by a group including chief technology officer Yogesh Gupta, senior vice president of product development Mark Barrenechea and executive vice president Russ Artzt.

"You can think of it as Mr Outside and Mr Inside," Cron said. "In his position [Kumar] can take information from the customers and bring it back, and with the other three create the [technology] team."

In his new job, Kumar reports directly to Cron and supervises no staff other than administrative employees. It's a position that will allow Kumar to continue carrying out the strategic plans he helped draft, executives said — but it's also one that leaves him organisationally isolated, an arrangement that could prove useful if CA needs to further distance itself from its former leader.

Kumar, CA's CEO from August 2000 through last month, stepped down following questions about his role in an accounting fraud that saw CA systematically record revenue before contracts were finalized to inflate its quarterly financial results. The scheme took place during CA's 2000 and early 2001 fiscal years, and affected revenue of $US2.2 billion. CA amended its 2000 and 2001 financial reports last month to correct the timing of its revenue recognition.

Kumar served as CA's president and chief operating officer during the period in which the accounting violations took place. CA say a board investigation of the fraud turned up no evidence of wrongdoing on Kumar's part, but government criminal and civil probes remain underway, and Kumar is widely believed to be a target of those inquires. Four former CA executives, including the company's expelled chief financial officer (CFO), have so far been indicted and pleaded guilty to charges including securities fraud and obstruction of justice.

CA chairman Lewis Ranieri is overseeing the company's coordination with investigators from the US Securities and Exchange Commission (SEC) and Department of Justice. Ranieri says he can't comment on when those investigations will conclude, but he's optimistic about the outcome.

In addition to filing charges against former executives, the SEC sent CA a "Wells Notice" in January, indicating that it is considering civil penalties against the company.

"I don't think we have been treated unfairly either by Justice or SEC," Ranieri said. "Their intention is justice, not retribution. They have said on any number of occasions, and I believe it to be true, that they do not want to irreparably harm the company."

Kumar, who is attending CA World but has no public appearances scheduled, said he will continue to spend as much time meeting with customers as he did as CEO.

"I'm really focused on technology. I'm really focused on customers. I'm not focused on the finances, the banks, the Wall Street kinds of things that Ken [Cron] has the privilege of worrying about every day," he said.

Kumar, a 17-year veteran at CA, claimed to be adjusting well to his new role: "I'm not the CEO of the company, that's very clear. A lot of people wonder, how do you make that transition? I care so deeply about this place — unless you understand how deeply I care, it can be hard to understand how I can kind of flip my hat and say, 'It doesn’t matter.' Ken will decide some things differently than I would have. That's perfectly cool with me."

In a wide-ranging interview, Kumar, Cron and Ranieri portrayed CA as a company with a deep executive team continuing to carry out a steady product development and customer service plan. In the three weeks he's held office, Cron said he has met with 20 of CA's largest customers, all of whom expressed satisfaction with the company's execution.

"The most difficult question I faced was not about the company issues you would think," said Cron, who went on to describe the complaints of a customer happy with CA's products but dissatisfied about pricing and the return on his company's investment.

In general, customers were happy with the service improvements the company has made in recent years and supportive of the steps it has taken since the accounting scandal came to light, Cron said. No customers have asked for price breaks or more flexible licensing terms in light of the company's corporate turmoil, he said.

Cron declines to comment on the timeline of the company's search for a new CEO, but reiterates earlier comments that he is not a candidate for the permanent job. CA is also searching for a new general counsel, to replace the one it ousted in connection with the accounting investigation, and a new CFO, to replace new hire Jeff Clarke, who was promoted to chief operating officer soon after being recruited.

Ranieri, a Wall Street legend who joined CA's board in 2001 after a 30-year career in finance, said that he thinks CA and the entire landscape of corporate America will emerge stronger for having been put under the spotlight of increased government scrutiny. High-profile collapses like those of Enron and WorldCom indicate deep problems requiring drastic solutions, he said.

"Four years ago I would never, ever, ever, ever have believed that the degree of problems existed in the system that obviously existed, even here [at CA]," he said. "This is not the first of these cycles. If you remember the thrift crisis, we went through a spurt where revenge was the order of the day. … In 1987, I had to live through this whole thing. When you're in the middle of it, it isn’t very much fun, and looking back it could have been done more elegantly, but the fact was the system was broken and it had to be fixed. Sometimes a meat cleaver is a handy tool."

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