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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

According to the Los Angeles Business Journal, the acquisition deal included more than $US30 million for the former ServiceMesh executive allegedly behind the bribery scheme.

The CSC filing notes that the large payments breached the Equity Purchase Agreement, and violated "numerous" CSC rules and policies that CSC claims Pulier agreed to when he signed a Retention Agreement with CSC.

"Pulier's wrongful conduct caused CSC to pay over $98 million in earnout payments that it otherwise would not have paid, and resulted in a significant criminal law enforcement investigation in Australia that has caused CSC to incur significant legal and investigative costs," said the CSC filing.

CSC is now trying to reclaim the additional $98 million it paid in the acquisition, with the filing stating that CSC and ServiceMesh now seek to recover the "substantial damages" caused by what it alleges was Pulier's "intentional misconduct, fraud, [and] fraud by omission".

When CSC announced its acquisition of ServiceMesh in late October 2013, the company said it viewed the deal as a strategic move to enable CSC to continue its transformation into a next-generation IT company with increased cloud migration capabilities.

"With ServiceMesh, we will empower an ecosystem of enterprise software providers by lowering the friction for companies to execute a multi-vendor hybrid cloud strategy while maintaining central governance, policy, and administration," CSC chief technology officer, Dan Hushon, said upon the announcement.

"Bringing ServiceMesh and CSC together creates a true leadership position in IT transformation," said Pulier at the time.

Since CSC took legal action against Pulier, however, the former ServiceMesh chief has counter-sued, returning legal fire on 4 May this year, pushing for the Delaware Chancery Court to have CSC advance him legal fees related to the prior lawsuit.

According to a report by Law360 , an attorney for Pulier argued that the former ServieMesh CEO was an officer of CSC during the period he was kept on as vice president after CSC's acquisition of the company, meaning that he would be entitled to fee advancement under the company's bylaws.

However, CSC attorney, Bryant Boren Jr, rejected the claim, countering that Pulier was never an officer of the company, as such a position can only be bestowed by an official vote of the CSC board of directors, under the company's bylaws.

"If we did not have a letter he [Pulier] signed saying 'I resigned all my positions at ServiceMesh,' we might have a horse race," Boren reportedly said.

Following up on 12 May, the Court ruled that Pulier was entitled to receive some, but not all, of the fee advancement claims his legal team was calling for.

"I am granting in part and denying in part the motions by each side. The bottom-line effect of this ruling will be to award Mr. Pulier advancement for his defense of most but not all of the counts asserted against him in the underlying action," the Court's chancellor, Andre G. Bouchard, said in a statement.

"Accordingly, in my opinion, he [Pulier] is entitled to advancement for 80 per cent of his reasonable expenses to defend against the underlying litigation," he said.

Source: ARN 


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