Computer Associates to pay $225 million

NEW YORK — Former Computer Associates International Inc. chairman and chief executive Sanjay Kumar has been charged with securities fraud, conspiracy and obstruction of justice in connection with a multibillion-dollar accounting scandal at the software company.

The charges were unsealed Wednesday, after the company itself agreed to pay $225 million to shareholders as part of a settlement that allows it to defer criminal prosecution. That agreement also settles securities fraud charges brought by the Securities and Exchange Commission.

A 10-count grand jury indictment returned last Friday also charges Kumar with conspiracy to obstruct justice and levies the same charges against Stephen Richards, the company’s former head of worldwide sales.

Under the highly unusual deal to defer prosecution, an outside monitor will track Computer Associates’ financial reporting for the next 18 months.

Deputy Attorney General James Comey said the deferral will “give the company the opportunity to demonstrate that it has a culture that can be saved. Our focus is not on doing harm for harm’s sake.”

“If they don’t take those steps, the consequences will be severe,” Comey added.

Computer Associates chairman Lewis Ranieri called the agreements “a critical step in closing this deeply troubling chapter” in the company’s history.

“Some former members of CA’s management engaged in illegal activity,” Ranieri said. “Violations of law and ethical standards, including securities fraud, obstructing a government investigation, and lying to CA’s board of directors and CA’s lawyers cannot be condoned. We fully support the government’s efforts to bring all responsible parties to justice.”