Disgraced former CA executive Sanjay Kumar has agreed to pay at least $52m in restitution payments over the next two years victims of an accounting scandal that he engineered as CEO. He has also been ordered by federal authorities to pay 20% of earnings made after he completes his 12-year jail term.
The former CEO of one of the world’s largest software firms will start his sentence in August. He had originally been scheduled to start this month, but managed to get this pushed back to the summer after arranging for the payment of the restitution to victims.
Technically the restitution agreement signed by Kumar makes him liable to pay as much as $800m to investors that lost money on CA. However legal officials acknowledge that Kumar will probably never have enough money to pay that full amount.
A federal judge in New York is currently considering the deal which will allow Kumar to make installment payments of $40m, $10m and $2m by December 2008. The money will come from the liquidation of assets from Kumar and his family according to court documents.
The 20% earnings payments will continue for the rest of his life.
As part of the agreement, prosecutors will not pursue assets held by Kumar’s relatives. Nor will they enforce an $8m fine that was imposed at sentencing to make more money available to fraud victims.
Kumar pleaded guilty to charges of stock fraud and obstruction of justice in an accounting fraud trial last year. He was sentenced last November.
Kumar was found to have reported in excess of $2bn in falsified revenue between 1999 and 2000 in order to hit Wall Street profit estimates. He was also found guilty of accounting fraud and a subsequent cover-up that included backdating contracts, lying under oath, and trying to buy the silence a potential witness.
Kumar spent nearly two decades at Islandia, New York-based CA, which employs around 15,000 employees worldwide. CA reported a net loss of 139m on a 6% rise in revenue to $3.7bn in fiscal 2006.