In a live satellite radio interview last night, New York Islanders owner Charles Wang claimed that, despite the financial and performance challenges the Islanders are confronting, he will not put the team up for sale. But given allegations by the board of directors at his former company regarding Wang's prior veracity problems, combined with ongoing financial issues in his dealings outside of the Islanders, we feel no Islander fan should have high confidence that the team will stay in New York.
Speaking on "NHL Hour with Commissioner Gary Bettman," Wang fielded questions from callers, most of which had to do with whether he would move the team off of Long Island, or sell it altogether. While he would not rule out the possibility of moving it to another location in the New York area, Wang stated adamantly that “the team is not for sale.”
Fans would be well advised to ask more questions rather than blindly take Wang at his word. Wang is the co-founder and first CEO of Computer Associates, a huge software company based on Long Island that was enmeshed in a huge accounting fraud scandal several years ago that left the “Computer Associates” name so toxic that the company changed its name to CA. Wang denied any involvement in the scandal as adamantly as he denied last night that the Islanders are for sale. Although the case landed Wang’s protégé, Sanjay Kumar, in prison, government investigators were unable to bring charges against Wang due to a lack of evidence. According to former CA employees, Wang was successful in hiding his involvement because he painstakingly avoided using e-mail and voicemail.
But that didn’t stop the Special Litigation Committee of CA’s board of directors from conducting its own investigation in 2007, and from drawing the conclusion that Wang masterminded the accounting fraud. It found that “fraud pervaded the entire CA organization at every level, and was embedded in CA’s culture, as instilled by Mr. Wang, almost from the company’s inception.” The committee also concluded that “Under Mr. Wang, CA was known as a ‘one-headed’ dragon, and no significant decisions were made without his participation and approval.” Consequently, the committee recommended suing Wang for at least $500 million in damages.
Meanwhile, Wang serves as chairman of an Internet TV service provider based in Plainview, N.Y., called NeuLion Inc. Aside from Wang’s installation of his wife as CEO and former CA executives in all of the top management positions, it’s worth noting that at least two of the members of NeuLion’s board of directors have very questionable credentials.
The board’s vice chairman is G. Scott Paterson, who in December 2001 was fired from his job as chairman and CEO of Canadian brokerage Yorkton Securities due to “complaints about fast-and-loose dealings.” Paterson reached a settlement with the Ontario Securities Commission in connection with “conduct that was, in the view of the commission, contrary to the public interest in connection with certain corporate finance and trading activities engaged in by Mr. Paterson and the investment dealer with which he was associated.” Under the settlement, Paterson paid CAN$1 million to the commission and was barred from trading for six months.
Another NeuLion board member is Shirley Strum Kenny, president of the State University of New York at Stony Brook, who served on the CA board that in 1998 approved a questionable $1.1 billion bonus that was split between Wang, Kumar, and CA co-founder Russell Artzt. Wang’s share of that fortune was $670 million. Moreover, Kenny was embroiled in a conflict of interest controversy at SUNY Stony Brook stemming from her service on the CA board.
In any case, NeuLion’s leadership is running a company that’s hemorrhaging money. The company lost $19.6 million in 2009, and $14.2 million in the first nine months of 2010. All of this is on top of the fact that under Wang’s ownership, the Islanders franchise has suffered losses estimated to be in the range of $100 million to $200 million, and the team is currently estimated to be worth $149 million, 20 percent less than what Wang paid for it in 2000.
The bottom line is that all of these reports suggest that Wang is under intense financial pressure, not only as the owner of the Islanders, but as a result of his other business dealings and his allegedly fraudulent activity at CA. No one should think for a moment that Wang won’t sell the Islanders in a heartbeat if his other fortunes continue to plummet, and especially if CA is successful in suing him for the half-billion dollars it’s eager to recoup.
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