Ex-CFO of McKesson Pleads Not Guilty

Richard Hawkins, former chief financial officer of McKesson Corp., the No. 3 U.S. drug wholesaler, pleaded not guilty Wednesday to charges that he helped inflate revenue after the company’s purchase of HBO & Co. that caused investors to lose $9 billion.

Hawkins, 53, was indicted Tuesday by a federal grand jury in San Francisco on counts of securities fraud, conspiracy to commit securities fraud and making false statements to an accountant in connection with an audit of McKesson. He entered his plea at a hearing in San Francisco and was released after posting $500,000 bail.

Hawkins is the first executive who worked for McKesson before its 1999 acquisition of HBOC to be charged in the fraud investigation at McKesson. Six former HBOC executives have been criminally charged with prematurely booking more than $40 million in sales. Prosecutors have said the HBOC managers concealed the accounting move during merger negotiations.

Hawkins “misrepresented and concealed” aspects of a sales contract “to ensure that revenue for the transaction was fraudulently recognized,” the indictment said.

Hawkins and his attorney Walter Brown declined to comment after the hearing. Hawkins also is accused of negotiating a $20-million contract between McKesson and Data General Corp. in April 1999 that was backdated and gave Data General an unconditional right to return the McKesson product. Hawkins allegedly concealed that from McKesson’s auditors.