As we reported here at SYS-CON.com already last week, while charging Kumar the US government has agreed to defer prosecution of the company itself for 18 months in an unusual move known as "deferred prosecution."

The idea of this is to give Computer Associates time to show that it has cleaned up its act, and thereby avoid punishing CA shareholders twice over - it being understood that they have already suffered once over through the share price hit that CA took when it revealed back in April that it was restating its financial results from 2000 and 2001. 

CA, which has roughly $2.17 billion in the bank, is required as part of the deferred prosecution arrangement to pay $225 million cash and 5.7m shares to investors in compensation, explained Deputy Attorney General James Comey at a news conference yesterday in Washington.

Deferred prosecution will give CA "the opportunity to demonstrate that it has a culture that can be saved," Corney said. 

"Our focus," he continued, "is not on doing harm for harm's sake."

He added though that, if CA didn't take steps to mend its egregious ways, "the consequences will be severe." The software company has been accused of improperly booking $2.2 billion in revenues during 2000-2001, and obstructing the subsequent investigation procedures.

CA has accepted responsibility for the improper accounting practices and misstatement of revenue from Jan. 1, 1998, through Sept. 30, 2000, and for impeding and failing to cooperate with the Department of Justice and the SEC investigations.  "This conduct was wrong," said CA chairman Lewis Ranieri in a conference yesterday.  

"I want to be very clear on this point: We fully support the government's efforts to bring wrongdoers to justice," Ranieri added. 

While Kumar and Richards pleaded not guilty today. Steven Woghin, the company's onetime top lawyer and former general counsel , has in contrast already entered a guilty plea to securities fraud conspiracy and obstruction of justice charges and faces a long jail stretch.


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