Cendant's board split over board woes - WSJ
July 16, 1998 03:16 AM
NEW YORK, July 16 (Reuters) - A major boardroom rift has developed at Cendant Corp., complicating efforts by the franchising and marketing company to recover from revelations of accounting fraud, the Wall Street Journal reported Thursday.
The split, which has led to separate briefings and the hiring of different legal advisers, is between board members loyal to Cendant's chief executive officer, Henry Silverman, and those supporting its chairman, Walter Forbes.
Cendant was formed in December by $14 billion merger of Silverman's HFS Inc and Forbes's CUC International Inc.
Cendant's disclosure on Tuesday of wider-than-expected accounting fraud at former CUC businesses, including nearly $300 million in phony revenue over three years, has led to accusations and rebukes from both the Silverman and Forbes camps. A key part of the dispute is over what role Forbes should play in the future of the company, the newspaper reported.
Any decision on that issue, as well as others, is likely to be difficult because the 28-member board is evenly split between HFS and CUC members.
To remove either Forbes or Silverman would require approval of 80 percent of the board, and a person close to the matter said directors from CUC continue to support Forbes.
Several people close to Forbes said they believe Silverman is orchestrating a campaign to keep Forbes from becoming chief executive officer by exaggerating the accounting problems. A spokesman for Silverman denied the allegation, calling it "preposterous," the Wall Street Journal reported.
((New York News Desk 212 859-1700)) REUTERS
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