Kumar: Tough time

New York, June 6: Sanjay Kumar, the former chairman and chief executive of Computer Associates, has cut all ties with the company as a federal criminal investigation into Computer Associates and Kumar enters its final stages.

Computer Associates said in a statement that Kumar had resigned as chief software architect. He took that post in April after resigning as chairman and chief executive, a move that was part of a broader management shake-up.

Both the company and Kumar said Friday that they hoped Kumar’s departure would help Computer Associates resolve the 2-year-old investigation into fraud and obstruction of justice at the company. Four former executives have pleaded guilty to obstruction and securities fraud, and are cooperating with the government.

Federal prosecutors in Brooklyn could charge Kumar with securities fraud or obstruction of justice within the next several weeks, though charges are not imminent, according to people close to the investigation.

Jack Cooney, a lawyer for Kumar, declined to comment on the investigation.

Computer Associates is eager to cooperate with prosecutors and end their investigation, avoiding a company-wide criminal indictment that could damage its business. The company, based in Islandia, N.Y., said last month that it had offered the government $10 million to settle the case. Prosecutors rejected the offer, which is relatively small compared with the payments other big companies have made in fraud cases, and negotiations are continuing.

When Kumar resigned as chairman to become chief software architect, Computer Associates said he would have no day-to-day management responsibilities in his new role. Analysts viewed the new title as a way for the company to ease him out.

Since last fall, when the government’s investigation accelerated, the company has replaced nearly its entire senior management, including its chief executive, chief financial officer, general counsel and top sales executive. Computer Associates has even shunted aside its former lead outside law firm, Wachtell, Lipton, Rosen & Katz, whose lawyers conducted the company’s internal investigation into its accounting practices, which paralleled the government investigation. Sullivan & Cromwell, another major New York law firm, is now handling most of the company’s negotiations with prosecutors.

But even after his title changed, Kumar continued meeting with large customers and speaking to employees. Lewis S. Raineri, who succeeded Kumar as chairman in April, said in an interview with Newsday last week that Kumar was the company’s “single most important corporate resource.”

The Newsday article irritated prosecutors, according to people close to the investigation. They told Computer Associates that the company risked being indicted unless it severed its ties with Kumar.

Richard L. Ptak, an independent software analyst based in New Hampshire, said that Kumar would not have resigned unless he thought he would face charges.

“I think this indicates that he will be indicted,” Ptak said. “Otherwise there was no reason for him to leave.”

In their guilty pleas earlier this year, the former Computer Associates executives depicted a broad conspiracy at the company to obstruct the investigation. The pleas did not identify Kumar by name, but they contained references to unidentified senior executives who participated in the conspiracy. Kumar is one of those executives, people close to the investigation have said.

In a statement Friday, Raineri said that the company hoped that Kumar's resignation would help it resolve the federal investigation quickly.

'The board is committed to reaching a settlement of the government's investigation into the company's past accounting practices as quickly as possible,' he said. 'We are working hard to take the remedial steps necessary to put this entire matter behind C.A. Sanjay's decision to leave C.A. was made in that spirit.'

Bob Gordon, a spokesman for Computer Associates, on Friday played down Kumar's role at the company since April. Kumar has had no day-to-day operational responsibilities as chief software architect, and no employees aside from support staff reported to him, Gordon said. Computer Associates does not plan to hire another chief software architect, Gordon said.

In an e-mail message to employees Friday, Kumar said that he had realised recently that 'it was difficult for many people - customers, employees, investors, and even the media - to separate me from my former responsibilities.' He added, 'I also learned in the past few days, that this perception of my position of leadership was not helping C.A. move forward to put all these government matters behind it.'

As a result, Kumar said, he had decided to resign. 'While I might be leaving in person, I will always be here in spirit,' he said, closing his note by calling himself the company's 'number one fan.'

Cooney, Kumar's lawyer, said that his client looked forward to spending time with his family and did not expect to take another job for some time. The company and Kumar plan to wait until the government investigation is resolved before negotiating a severance package, Gordon said.

With sales of $3.3 billion and 16,000 employees, Computer Associates is the fourth-largest independent software company.

Kumar joined Computer Associates in 1987, at 25, and rose rapidly through the ranks. In 1994, he was named the company's president and chief operating officer, becoming its second-ranking executive.

During the 1990s, Computer Associates appeared to be growing very quickly, and its stock soared.