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April 21, 2004

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Publication Date: Wednesday, April 21, 2004

Former McKesson CFO pleads not guilty to securities charges Former McKesson CFO pleads not guilty to securities charges (April 21, 2004)

By Jonas Raab
Special to the Almanac

Richard Hawkins, 53, of Atherton, a former chief financial officer of the pharmaceutical wholesaler McKesson Corp., pleaded not guilty March 31 to charges brought by a federal grand jury of conspiracy to commit securities fraud and making false statements to an accountant in connection with McKesson's quarterly earnings report of April 1999.

Mr. Hawkins was released on a $500,000 unsecured bail bond.

Mr. Hawkins also faces civil securities fraud charges from the Securities and Exchange Commission, which said the fraudulent activity took place shortly after McKesson's 1999 acquisition of HBO and Co., a medical software company.

Mr. Hawkins is the first officer of McKesson who was not associated with HBO and Co. before the merger to be indicted. He is one of 12 charged civilly by the SEC and one of six charged criminally, of whom four have pleaded guilty.

The U.S. Attorney's Office said Mr. Hawkins participated in a scheme with other McKesson officers to artificially inflate the company's earnings for the quarter ending March 31, 1999, by fraudulently recognizing as revenue a $20 million transaction between McKesson and Data General Corp., which McKesson independent auditors told him he could not do since the transaction occurred after the end of the fiscal quarter.

Mr. Hawkins' attorney, Walt Brown of the San Francisco firm Orrick, Herrington & Sutcliffe, called the indictment a grave injustice.

"Far from being a collaborator in the massive fraud McKesson unknowingly inherited by acquiring HBOC, Mr. Hawkins was a victim along with McKesson and its shareholders," said Mr. Brown.

Mr. Brown said Mr. Hawkins immediately communicated what he knew to auditors so that it would receive special attention in their audit.

"Mr. Hawkins had absolutely no motive to collaborate in HBOC's fraud or turn a blind eye," Mr. Brown said in his statement. "His compensation was entirely unaffected and he did not sell any McKesson stock."

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