A former McKesson Corp. executive who resigned in the wake of a massive accounting scandal nearly five years ago was indicted by a federal grand jury on charges that he participated in the scheme by including an improperly backdated $20 million transaction in an April 1999 earnings release. The scandal surfaced within months of the January 1999 merger between San Francisco-based McKesson and HBO & Co., an Atlanta-based healthcare software company, triggering a 47% drop in the stock price of McKesson HBOC and a $9 billion drop in shareholder value. Criminal charges against Richard Hawkins, 53, are the first involving an officer from the McKesson side of the merger. Although the fraud mainly involved actions taken by HBO executives to shore up earnings in the year prior to the merger, improper recording of contracts continued in the first quarter of 1999, according to the indictment.
Hawkins was McKesson's chief financial officer until he resigned in June 1999. The U.S. attorney's office in San Francisco brought criminal charges of securities fraud, conspiracy to commit fraud and making false statements to an accountant. The Securities and Exchange Commission filed civil charges of securities fraud, falsifying books and records, and lying to accountants. Hawkins is the 12th executive charged in the scandal by the SEC and the seventh accused of criminal conduct. An attorney for Hawkins called the indictment "a grave injustice" and said he would prove his client's innocence. Four executives have pleaded guilty to criminal charges, including former HBO Presidents Albert Bergonzi and Jay Gilbertson. A trial is pending for Charles McCall, former chairman and chief executive officer of HBO and chairman of the McKesson board after the merger. McCall was dismissed by McKesson HBOC in June 1999. The company changed its name back to McKesson Corp. in 2001. -- by John Morrissey