Darwin's ACS in a Sling. Or Not.

Categories: Biz

It's a new year, but the same ol' news stories still keep cropping up -- and this one isn't going away any time soon.

For months, we've written here about the backdated stock-option scandal at Dallas-based Affiliated Computer Services, most recently about the firings -- pardon, the resignations -- of CEO Mark King and CFO Warren Edwards, who are being kept on till the summer nonetheless at fairly hefty monthly salaries. They were ousted as a result of an internal investigation; still looking into things are the U.S. Department of Justice, the Securities and Exchange Commission and attorneys representing shareholders in federal lawsuits filed in Dallas. (Among those attorneys is former U.S. District Judge Joe Kendall, who's representing the Alaska Electrical Pension Fund.)

Also on the case is The Wall Street Journal, which broke the original story about ACS' backdating of stock options in March 2006. On Saturday, the Journal ran a story in which it wondered exactly how it is ACS' former CEO and current chairman Darwin Deason has managed to escape punishment even as his soldiers fall all around him.


In the story headlined "Living Large and Bouncing Back," writers James Bandler and Charles Forelle paint a most unflattering portrait of Deason -- a man who appeared in a "Vanity Fair photo spread aboard his 205-foot yacht in Monte Carlo's harbor with a drink in one hand and his bikini- and stiletto-clad companion in the other."


In short, they say among the biggest unanswered question resulting from the scandal and internal investigation remains: "How Mr. Deason, who founded ACS and was CEO and head of the compensation committee through much of the backdating era, could have been unaware if such an egregious infraction was occurring."


Deason didn't sit for an interview. His spokesperson says he's done nothing wrong. Among his staunchest defenders: Larry North, who could bench press Deason if so instructed by a jury, no doubt.


The day before the Journal story appeared, ACS issued a press release in which it announced its 2006 Annual Meeting of Stockholders will be finally be held on June 7, 2007. A little late, yeah, but with good reason. Investigations and all.


Also in ACS news, there's a story outta Macon, Georgia, today that says some officials there aren't happy with the decision to use the company for its red-light cameras. Not only are some people unhappy with the backdating thing, but there's also this: "In February, a more than 18-month investigation by Canadian authorities ended with charges filed against ACS for bribing police officers in Edmonton, Canada." Also, reports the paper:


Almost two and a half years ago, ACS agreed to pay the state of Georgia $10 million for delays and operational setbacks that happened after the Department of Community Health hired the company in 2001 to process both Medicaid and state employee health benefit claims, according to company documents filed with the SEC.

The state canceled the second phase of the contract, dealing with employee benefits, after problems surfaced with the system's Medicaid operations.

"It was a debacle," said Macon City Councilwoman Nancy White, who also is director of senior health services and government relations for Coliseum Health System. In that role, she said, she routinely attended monthly DCH meetings that were filled with health-care providers venting complaints about problems ACS caused.

"In terms of a reference check, I would hope that the city of Macon would call the state Department of Community Health and do their due diligence," she said.

Of course, the deal is likely to go through nonetheless. Larry North will be installing each camera personally. --Robert Wilonsky

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