Cron: CA Ready To Put The Past Behind It

The management of Computer Associates used CAWorld 2004 to address in detail for the first time how the company is being affected by ongoing federal investigations, and how new leadership will direct CA going forward.

In the past two months, the company has reassigned former chairman and CEO Sanjay Kumar, fired its former CFO, and restated its financial reports for fiscal years 2000 and 2001. The company is now ready to put the past behind it and "embark on a new chapter" with clearly defined roles for its new management team, interim CEO Kenneth Cron said at the company's annual user conference in Las Vegas. "No one is trying to whitewash it, or make believe (the Security and Exchange Commission and Department of Justice investigations) didn't happen," Cron said. "But it's great to have CAWorld as the lightning rod to show how it's now all coming together."

Roles at the company now have been clearly defined, he said. Cron will lead the company until such time as the board finds a full-time CEO. Jeff Clarke, who joined CA as CFO in April, will serve as chief operating officer and continue to handle CFO duties until a new CFO is named. Lewis Ranieri, a CA board member who was named chairman earlier this month, will be in charge of working with federal officials in completing the investigation of the company's financial-reporting methods in 2000.

Product direction and vision will be driven by Yogesh Gupta, chief technology officer; Mark Barrenechea, senior VP of product development; Russell Artzt, executive VP of eTrust Solutions; and Kumar, who is now chief software architect.

Kumar said there should be no question about what his duties will be in the future. He will split his time between working directly with customers and in product and technology definition.

"I am not the CEO of the company, and that is very clear," Kumar said. "I'm one of those people who is very black and white about it. People have asked how I can make that transition. It's difficult to understand how I can flip my hat and say, 'I'm no longer the CEO'; but if you really care about the company, it doesn't matter."

In the past, Kumar said, he spent about half his time directly in contact with customers, and divided the other half between technology advancement and the duties associated with being a CEO.

"The customers will still get the time and attention they've always gotten from me, and now the technology side will get even more attention," he said.

Ranieri, a former vice chairman of Solomon Brothers who has been involved in helping about nine companies go public, said he believes the SEC and Justice Department are attempting to deal fairly in their investigation of CA. "I don't think we have been treated unjustly either by Justice or the SEC," Ranieri said. "I think with the facts they had in hand, they've been doing what they are supposed to be doing."

Ranieri said he can't fully comment on the investigation, which he hopes will be completed soon. "I know many things about the truth of what went on that are not public," he says.

CA is part of a bigger picture shift in federal pressure to more closely serve as a watchdog against violations of pubic trust, a situation that has happened a number of times before, Ranieri said. The latest wave of federal pressure on public companies was triggered by scandals such as those with Enron and Arthur Andersen.

"I would never ever, ever have believed the degree of problems that existed in the system, that obviously did exist, including here," he said. "The fact is the system was broken and it had to be fixed--and sometimes a meat cleaver is a handy tool."

Ranieri said new financial accounting requirements such as those with Sarbanes-Oxley are going to be extremely difficult for companies to meet.

"Some reform like Sarbanes-Oxley was really required, it's more of an issue of how it's implemented," he said. "There's a whole suite of technology answers to be forced on everybody--and you're going to have a very hard time meeting the requirements with a very fragmented data library and you'll never be able to pull together the kinds of reports that are going to be required to get a clean audit."

But even given the difficulties that all companies will face going forward, Ranieri believes that CA will receive just treatment when investigations of the company are completed.

"Their intention is justice, not retribution," he said. "They've said on any number of occasions, and I believe it to be true, that they don't want to irreparably harm the company."