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Executive Overspending

Wilmington, DE: (Dec-08-07) Dhruv Khanna, co-founder of Covad Communications Group Inc., brought charges against the company alleging that Covad Chairman Charles McMinn and other directors approved lavish executive contracts and junkets including golf trips to Scotland. The suit, filed by Khanna on behalf of the company, sought at least $125 million in damages. He accused directors of self-dealing in the company's acquisition of Blue-Star Communications Group Inc. in September 2000. Records show that Covad paid $200 million in stock and debt for BlueStar and eventually dissolved the company to save money. As part of a settlement reached, Delaware Chancery Court Judge John Noble approved a $7 million payout, stating that the directors wasted money and enriched themselves at the expense of shareholders. The court awarded $1.9 million in attorney fees and costs. [DELAWARE ONLINE: COVAD]


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Published on Dec-11-07


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