In a move that has been called unprecedented, forty-four senior executives of Cendant have signed a letter of request asking the board of directors to fire chairman Walter Forbes. The letter makes clear that the executives will not be able to work with Forbes.

Forbes, who has refused to resign, continues to protest his innocence in the emerging scandal that CUC International fraudulently reported phantom earnings of over $300 million over a three-year period prior to its merger with HSF, resulting in the formation of a new company, Cendant.

Cendant's troubles began in April when accounting irregularities were discovered in CUC business units. As more troubling disclosures are made, Cendant stock continues to free fall, down 65% since the fraud allegations were first raised.

The Cendant executives believe that the issue of innocence isn't so important as the fact that Forbes "as the CUC executive officer should have known."

When Cendant was formed in December, Forbes as CUC's CEO, became chairman of the new board and HSF's CEO Henry Silverman became CEO of Cendant. Forbes contends that the pressure to resign or to be fired by the board is an attempt on Silverman's part to "take control."

Some of the executives who signed the letter worked for Forbes at CUC, but most are loyal to Silverman. Although the Cendant board is evenly split between CUC and HFS members, industry speculation is that the board will capitulate and Forbes will be fired.

Even if Forbes is fired, he will walk away with a generous severance package totaling well over $25 million.

Click here for: Text of Cendant Letter.

Published: July 23, 1998

Use of this article without permission is a violation of federal copyright laws.

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