California investors may be interested in learning about a recent lawsuit filed by Computer Sciences Corporation against Eric Pulier, the former CEO of ServiceMesh. People might remember that ServiceMesh was purchased by CSC in October 2013 for an eyebrow-raising sum of $260 million.
At the time of the purchase, CSC justified the high purchase price due to ServiceMesh’s having apparently successfully securing lucrative contracts with the Commonwealth Bank of Australia. In March 2015, two executives from the bank were arrested by Australian Federal Police and charged with bribery for allegedly taking $2.9 million in kickbacks from a trust that was reportedly set up by Mr. Pulier.
According to the complaint filed by CSC, the company reacted to the criminal charges against the executives by firing Mr. Pulier. Reportedly, when the company sought to interview him about the payments to the executives, he refused to speak unless CSC would agree not to pass what he had to say along to the Australian Federal Police. The company refused, and is seeking to recover the entire purchase price for ServiceMesh from Mr. Pulier. It alleges he committed fraud by bribing the executives in exchange for his company’s being awarded the lucrative contracts in order to drive up ServiceMesh’s value.
Cases like the one above often involve contract disputes and allegations of business fraud. They also point out the importance of conducting thorough due diligence of the target company and its officers when considering a proposed acquisition. When a company has been damaged by this type of fraud, it may want to seek help from a business and commercial law attorney to determine the remedies that may be available.
Source: Forbes, “CSC sues Eric Pulier–alleges fraud as a valuation-increasing strategy,” Ben Kepes, May 18, 2015.
