A year ago you would have been crazy to want to work as the general counsel of Long Island-based Computer Associates International. The company's GC, Steven Woghin, had plead guilty to two counts of conspiracy to commit securities fraud and obstruction of justice, and the CEO at the time, Sanjay Kumar, had been charged with similar crimes. Meanwhile, shareholders were looking to lynch company executives for cooking the books to inflate earnings.To outsiders, CA Inc., as the company is now known, seemed like a cesspool of unethical behavior.
Kenneth Handal, who accepted the GC position at CA in July 2004, viewed the conditions at CA as more of a challenge than deterrence.
Brooklyn-born Handal joined CA from Altria Group Inc. where he served as in-house compliance and ethics counsel from 1996 to 2000. He originally joined the company to handle the DOJ's criminal investigation of Philip Morris. Before working at Altria, he was a partner at Arnold & Porter in New York, where he practiced white-collar defense and civil litigation. He also spent five years as an assistant U.S. attorney for the Southern District of New York, prosecuting drug dealers and white-collar criminals.
Handal's charge at CA was not only to help reconstruct the company's ethical culture, but also to rebuild its legal department, where morale had been decimated by Woghin's admission of wrongdoing and the firing of five other in-house lawyers for their involvement in the crimes. Furthermore, the entire company was operating under a deferred-prosecution agreement, something Handal helped forge to keep the company out of court. The agreement called for the company to overhaul its governance practices and management structure, as well as to allow an independent examiner to watch over the company's operations.
Although the company is struggling to regain its financial footing, it has been commended for its governance changes and seems well on its way to repairing its tarnished image. A lot of the credit for the latter goes to Handal and his 61-lawyer department.
Q: Why did you want to work at CA?
A: It was really a tremendous challenge--there was a lot that had to be done. It was a big rebuilding process. Before I came on board 19 senior officers had been dismissed by the board. I could see that it was going to be an exciting process and that I was going to get a lot of support from upper management and the board.
Q: But the legal department had to have been in pretty bad shape when you took over, right?
A: When I came in we had 32 lawyers on staff and the GC had been fired and indicted for securities fraud and obstruction of justice. I find that unfathomable. It's amazing that the 32 lawyers and others in the department had managed to get through this period. I've done a lot of criminal work in my life, but I've never been as close as they were to people who were getting charged with crimes. I am very proud of how they got through it.
Q: What was the first thing you did?
A: I brought the lawyers in from overseas and we had a three-day meeting. Some of them had never been to the headquarters. The company also had 23 lawyers and paralegals who did not report into the department. They reported to something called sales finance. When you don't have lawyers as the independent beacon of ethics and compliance, then the kinds of things that happened at CA can
happen all too easily.
Q: You also changed the name of the legal department to the Worldwide Law Department. Why was that important?
A: It was good to break from the past and look to the future. And I thought it was important that we feel like we were a new group and that we were worldwide.
Q: You also started a pro bono program, which you also did at Arnold & Porter and Altria. Why was that important?
A: It's important that lawyers do something for their communities. Our lawyers really enjoy it and get good experience out of it.
Q: Right now the company is operating under a deferred prosecution agreement, and you have an independent examiner on site who is keeping an eye on everything. Does that make your job more difficult?
A: It's an added challenge, but it also is very helpful. If you look at the agreement, you will find that it really is a roadmap to good corporate governance. It spells out several things any company ought to be doing. It is showing us how to get from
A to Z and build a good infrastructure.
Q: Did you have to rebuild the reputation of the legal department within the company?
A: It really wasn't an issue. But this place needed an independent law department that could act as the conscience of the company. We empowered our lawyers to make decisions and do what they think is right. That has helped a lot.
Q: A lot of people talk about the need to build an ethical culture. What does that mean to you?
A: From my point of view, the key is that you have a strong legal department. If you have a strong legal department, the chances you will get into trouble are far less. You also have to make it part of everyone's daily work lives. We are constantly telling our people that we want to act ethically and we want to do the right thing and that compliance needs to be a part of their daily lives. I'm not sure if people were hearing that before.
Q: So you have been at this for about 19 months. Are you happy with the results of your rebuilding effort?
A: For the first time I feel like we are no longer in a crisis-management mode. Until about January, everything was a crisis. We have really turned a corner and we can now operate like the world-class legal department that I want us to be and deal with things with a little more process.
Q: What's your proudest accomplishment?
A: That's easy. People in the law department are happy. And they deserve that.
Q: Who have you turned to for help in rebuilding the department?
A: Bill Lytton at Tyco has helped me a lot. I have known Bill since 1966 when we started college together. Bill dealt with many of the same things I am dealing with. Sometimes we try to outdo each other to see who had the worse situation.
Q: What are your priorities going forward?
A: I want to get things running as smoothly as I can. I want to get everybody in the department doing the things we should be doing and get our lawyers more integrated into the business.