Walter Forbes: A Probe Casts A Pall

Cendant Chairman Walter Forbes says he'll keep his job--even though some investors want him out. On July 14, Cendant said accounting irregularities will knock about $200 million off '97 earnings. An ongoing probe has revealed that CUC International, which Forbes ran before merging it with Henry Silverman's HFS to create Cendant, was booking fictitious revenue as far back as '95. The stock dived nearly 17%, to 15 11/16, on July 14--62% off its 52-week high. "More than 50% of CUC's 1997 net income was not there, either due to accounting error or fraud," Silverman says. "This has cost me $1 billion."

Forbes says he had no role in any wrongdoing and will still become CEO in 2000. But Hans Utsch, president of Kaufmann Fund, which holds 12 million shares, says: "He will go down in history as playing a major role, directly or indirectly, in perpetrating the biggest fraud of this decade." Says another big shareholder: "He's gone." Any action by Cendant's board is unlikely until the accounting investigation is completed in August.