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Federal Contractor Misconduct Database (FCMD)

The federal government routinely awards contracts to companies with histories of misconduct, including contract fraud and other violations. POGO believes that providing this website will help to improve contracting decisions and increase public knowledge of how the government spends billions of taxpayer dollars each year. Read more…

Accounting Errors Regarding U.K. Contracts

In December 2014, Computer Sciences Corporation announced it would pay a $190 million penalty to settle a Securities and Exchange Commission (SEC) investigation into CSC’s alleged overstatement of earnings from British government contracts. CSC publicly acknowledged there had been accounting errors from fiscal years 2009 to 2012 relating to the financial impacts of information technology contracts with the National Health Service (NHS). As part of the settlement agreement, in which CSC did not admit any liability or wrongdoing, the SEC filed an administrative enforcement action against CSC alleging violations of the antifraud, reporting, and books-and-records provisions of the securities laws.

In June 2015, the SEC formally charged CSC and 8 former executives with manipulating financial results and concealing significant problems about the NHS contracts. The SEC additionally charged the executives with ignoring basic accounting standards to increase reported profits. Five of the 8 executives agreed to settlements. Former CEO Michael Laphen agreed to return to CSC more than $3.7 million in compensation under the clawback provision of the Sarbanes-Oxley Act and pay a $750,000 penalty. Former CFO Michael Mancuso agreed to return $369,100 in compensation and pay a $175,000 penalty. Former CFO Wayne Banks agreed to pay disgorgement of $10,990 with prejudgment interest of $2,400, plus accept an officer-and-director bar of at least four years as well as a bar from practicing as an accountant on behalf of SEC-regulated entities for at least four years. Former Nordic region finance director Paul Wakefield agreed to accept an officer-and-director bar of at least three years as well as a bar from practicing as an accountant on behalf of SEC-regulated entities for at least three years. Former Nordic region finance director Claus Zilmer agreed to settle the charges. Former executives Robert Sutcliffe, Edward Parker, and Chris Edwards contested the charges against them. In 2013, CSC paid $97.5 million to settle a shareholder class-action lawsuit relating to the NHS contracts (see Computer Sciences Corporation instance, “City of Roseville Employees’ Retirement System v. CSC (Securities Class Action)”).

Misconduct Type
Securities
Enforcement Agency
SEC
Contracting Party
None
Court Type
Civil
Disposition
Settlement
Date of Settlement Announcement
12/29/2014
Contractors Involved Penalty
Total
Computer Sciences Corporation $190,938,390
Further Information Released
Complaint (Edwards) 6/5/2015
Complaint (Parker) 6/5/2015
Complaint (Sutcliffe) 6/5/2015
SEC Order 6/5/2015
SEC Press Release 6/5/2015
CSC Form 8-K 12/26/2014

See also:

Federal Contractor Misconduct Database