McKesson Faces Suit Over Sales Accounting

McKesson Corp. is being sued by a former chairman of HBO & Co., who says executives tricked him into buying shares in the merged companies before accounting fraud led to a 1999 plunge in the stock price.

Holcombe Green was chairman of HBOC, a health-care software company, for 10 years until San Francisco-based McKesson bought it for $13.9 billion in January 1999. Three months later, McKesson HBOC Inc., as it was known, said it would restate income because HBO prematurely booked more than $40million in sales before the merger. The stock price fell and the firm lost $9 billion in market value.

Green’s suit, filed in Fulton County Superior Court in Atlanta, says McKesson and HBOC knew that other HBOC executives had inflated the company’s revenue. The suit seeks $100 million in damages.

Shares McKesson rose 67 cents to $37.93 on the Big Board.