SCO vs. Linux: SCO funds for SCO investor

An objection from IBM lodged with the bankruptcy court has opened up a surprise new front in the SCO Group liquidation hearing. According to IBM lawyers, in 2008 SCO boss Darl McBride made personal payments to Steven Norris via an intermediary, for searching for further investors willing to invest in SCO. Money was also paid by SCO's German subsidiary SCO Deutschland, with which Norris is reported to have signed a consulting contract. The role played by Norris, who recently promised to rescue SCO through an investment group by the name of Gulf Capital, is therefore set to become a key point in this interminable saga.

Novell and IBM have submitted their objections to the bankruptcy court in advance of the hearing on the definitive liquidation of the SCO Group, scheduled to begin on 24th August. Both companies are entwined in legal disputes with SCO. The SCO vs. Novell case concerns Unix IP and that of SCO vs. IBM concerns Unix source code, illegally copied into Linux. As observers from Groklaw report, IBM has stumbled upon some potentially explosive payments.

According to their statements to the court, SCO boss Darl McBride made payments of $100,000 to investor Steven Norris, via an intermediary, to enable him, together with a group of investors, to continue to express an interest in SCO's litigation business. According to IBM's submission, McBride paid a total of $300,000 to an investor named Mark Robbins – for whom an arrest warrant has been issued in the State of Utah in relation to other business dealings. Robbins is reported to have forwarded $100,000 to Steven Norris, who also received a further $100,000 from SCO's German subsidiary. While the money from Robbins was forwarded without any kind of contract being signed, Norris is reported to have signed a consulting contract with SCO Deutschland, although this has not yet been produced.

IBM plans to provide further evidence relating to clandestine funding by the time of the scheduled hearing. From a legal point of view, it is the German payments that will be of most significance, if it can be shown that SCO failed to disclose specific receipts of funds or financial transactions during the liquidation proceedings. The role of SCO Vice President Worldwide Sales Johannes Bayer, who runs SCO under the name Hans Bayer, is likely to be of particular interest. The domain name Unxis.de was registered to a 'Hans Bayer' on 24th June 2009. Unxis is the name of the company with which Steven Norris' investors hope to re-enter the software business selling Unix products. SCO Group will retain responsibility for and will continue to pursue its legal disputes with IBM and Novell.

(Detlef Borchers)

(djwm)