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Thursday, 12 September, 2002, 19:30 GMT 20:30 UK
Tyco ex-bosses hit by more charges
Tyco products and services
Three former executives of embattled conglomerate Tyco, including its ex-chief executive, Dennis Kozlowski, have been indicted for running a "criminal enterprise" that stole millions from the firm.


[The three executives] treated Tyco as their private bank, taking out hundreds of millions of dollars of loans and compensation without ever telling investors

Stephen Cutler, SEC
The charges, unveiled by Manhattan District Attorney Robert Morgenthau, broaden an already extensive inquiry into the activities of Mr Kozlowski and his former employer.

The most serious of the charges alleges that Mr Kozlowski, together with former chief financial officer Mark Swartz, stole more than $170m (109m) from the company.

The charges have also triggered a raft of civil legal actions, from market regulators and Tyco itself.

Tyco, which is involved in dozens of businesses from fire prevention to medical equipment, fell dramatically from grace earlier this year as investors fled firms with any taint of Enron-style scandal.

Indictments mount

Mr Kozlowski is already under indictment for tax evasion, but this is the first time that criminal charges have become more than a merely personal matter.

Dennis Kozlowski, ex-Tyco-boss
Mr Kozlowski is already under indictment

Mr Morgenthau said his office was seeking an order to freeze $600m in assets of Mr Kozlowski and Mr Swartz, while the case is pending.

Separately, Mark Belnick, Tyco's former general counsel, was indicted for allegedly falsifying records to conceal about $14m in company loans to himself.

Civil suits

The district attorney's charges were the trigger for a number of civil actions against the former executives.

Tyco's current management has launched a $100m lawsuit against Mr Kozlowski, hoping to claw back some of the money allegedly lost.

And the Securities and Exchange Commission (SEC), the US stock market regulator, said Mr Kozlowski and the two others had committed fraud by failing to disclose profits from the company.

The three executives "treated Tyco as their private bank, taking out hundreds of millions of dollars of loans and compensation without ever telling investors," said Stephen Cutler, the SEC's director of enforcement.

Boardroom reshuffle

Later on Thursday, Tyco's board, slammed for failing to keep closer tabs on Mr Kozlowski, voted for a reshuffle which will see nine of 11 members go.

Only chief executive Edward Breen and Jack Krol, former chairman at DuPont, will be nominated and backed for re-election, the firm said.

Some of the nine rejected directors are expected to tend resignations forthwith, with others set to remain until their terms end early next year.

 WATCH/LISTEN
 ON THIS STORY
Bill Symonds, Business Week magazine
"[Dennis Kozlowski] is facing trouble on three fronts"
The BBC's Kate Noble reports from New York
"Tyco, based in Bermuda, make everything from burglar alarms to diapers"

Politics of regulation

Worldcom goes bust

Enron fall-out

Andersen laid low

FORUM
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25 Apr 02 | Business
04 Jun 02 | Business
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