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The soured partner sale that landed a banking IT exec in jail

Leon Spencer | Dec. 21, 2016
CSC locked in legal battle with former ServiceMesh chief

As former Commonwealth Bank of Australia (CBA) IT executive, Keith Hunter, gets jail time for allegedly taking kickbacks from the former head of US-based enterprise cloud management company, ServiceMesh, the legal battle to lay the bribery scandal to rest continues.

As reported by Computerworld , Hunter, former CBA IT infrastructure and operations chief, was sentenced on 20 December in Sydney District Court on two counts - one of corruptly receiving a benefit as an agent of his employer, and another of dishonestly causing financial disadvantage.

Judge David Arnott sentenced Hunter to more than three years' jail time, with a non-parole period of over two years.

Hunter was one of two CBA executives to be charged in March last year over the alleged bribery scheme, with the case of a former colleague still ongoing.

At the centre of the case is the allegation that the two CBA executives accepted financial kickbacks in 2013 and 2014 from Eric Pulier, the former head of ServiceMesh, in exchange for approving an IT contract for the partner slated to be worth more than $10 million.

The court heard that Hunter, whose take home pay in his capacity as a CBA executive came to some $1 million a year, was on track to receive about $US750,000 from the kickbacks.

Amid the kickbacks, Hunter allegedly pushed for CBA to purchase McAfee and Pivotal Cloud Foundry software and services through ServiceMesh, despite the bank previously rejecting such a deal over concerns it was too expensive.

Pulier allegedly used the Ace Foundation, a US-based non-profit organisation, to channel funds to Hunter and his CBA colleague.

While Hunter is also facing criminal charges in the US following an FBI investigation into the bribery scandal, Pulier - the former ServiceMesh CEO - is locked in a fierce legal battle with CSC over the circumstances surrounding the sale of his enterprise cloud management company to the US-based global IT services company.

CSC bought ServiceMesh in 2013 for more than $US260 million. The deal included $US93 million in cash, and an earnout payment of $US98 million.

"The earnout payment was based on certain revenue generated by ServiceMesh from January 1, 2013, through January 31, 2014," said a legal filing by CSC lodged in late 2015 in relation to a US civil case against Pulier, who has been allegedly implicated in the scheme.

"A significant amount of that revenue came from contracts between ServiceMesh and Commonwealth Bank of Australia Ltd...In fact, but for that revenue, ServiceMesh equity holders - including Pulier - would have received no earnout payment at all.

"In 2014 - after receiving his $US9 million initial cash payment, $US13 million employee bonus, $US25 million earnout payment, and $US26 million worth of restricted stock units, and while employed by CSC - Pulier transferred more than $US2 million to the personal bank accounts of two senior information technology executives at CBA," the filing stated.


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