3/21/2007ACS Seeks to Close its Books
ACS attempts to become a private company to avoid public scrutiny of its accounting practices.
Stung by US Securities and Exchange Commission investigations into its accounting practices, Affiliated Computer Services (ACS) is looking to close its books from public scrutiny. According to a company filing yesterday, ACS Chairman Darwin Deason and Cerberus Capital Management, L.P., offered $59.25 in cash for the purchase of all outstanding shares of ACS stock. The offer represented an 18 percent premium over the stock's average trading price over the past ninety days. As of 10am, the stock was trading at $59.75. Deason has placed $300 million worth of his own stock into the plan while Cerberus agreed to finance $6.5 billion of the purchase price.
Heightened scrutiny of ACS finances began last year when the company's two top executives were forced to step down after admitting to $51 million in stock options fraud. The company has also faced a number of public scandals including the accusation last week that ACS employees had sabotaged the Washington, DC photo enforcement system after the city council decided to switch to a new vendor, ATS. DC's financial auditor also reported that the District's parking meter contract with ACS resulted in the loss of $8 million to the city.
In Canada, ACS photo enforcement scandals brought criminal charges. The Royal Canadian Mounted Police last year charged ACS with bribing two Edmonton police officers in order to land a $90 million no-bid photo enforcement contract. The case is on-going. The former Edmonton police chief narrowly escaped charges of accepting hockey tickets and lavish meals from ACS against police ethics policy because the statute of limitations had expired. In 2004, ACS had abandoned copies of 320 photo radar tickets on a park bench -- exposing motorists to identity theft.
Other Canadian cities have experienced problems with the company. In Winnipeg, the machine that ACS uses to place the legally required police signatures on tickets -- without the involvement of police -- broke down last year. A city audit also complained that the company had overcharged the city for its services.