BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Tuesday, 17 September, 2002, 18:40 GMT 19:40 UK
Tyco details illegal bonuses
Tyco products and services
Tyco bosses tried to buy employee silence
Tyco International, the US conglomerate, has given details of a string of unauthorised payments by management to staff which totalled nearly $100m.

The group has also alleged that the company's former chief executive Dennis Kozlowski, who was indicted last week, tried to hamper an investigation into the payments.

The findings were submitted to the Securities and Exchange Commission, following an investigation into fraud at the company, whose products range from security systems to medical devices.

They give details for the first time of the so-called "loans forgiveness programme", whereby staff were given large bonuses - without board approval - which in effect cancelled out earlier loans they had take from company's relocation programme.


(Payments were) used to induce their co-operation or buy their silence

Tyco

Buying silence

The filing notes that Mr Kozlowski instructed personnel to pay $56m to 11 Tyco employees, claiming that the board had approved this.

A lawsuit filed by the company has alleged that the money was used in part to buy employees' silence over Mr Kozlowski's own excesses.

Payments were "used to induce their co-operation or buy their silence," said the company.

The company said: "This pattern of illegal and improper activity occurred for at least five years prior to June 3 2002, when former CEO Dennis Kozlowski resigned, and his activity was concealed from the board and its relevant committees."

Expensive tastes

According to the lawsuit, Mr Kozlowski invented a new bonus program for himself and select executives in November 2000, and that $50m was paid to the chief executive and the company's former chief financial officer Mark Scwartz.

Both were indicted last week for embezzling nearly $600m from the company.

Details of the former chief executive's personal expenses, using company money, included $97,000 on flowers, $2,900 for coat hangers, and $15,000 for dog umbrellas.

All change

Despite the costly fraud, Tyco has said it will not need to restate its financial results this year.

However, the scandal has cost the company dearly in terms of share value.

Tyco stock has slumped more than 70% in the last year on the New York stock exchange and fell another 33 cents to $16.21 as details of the fraud emerged on Tuesday.

The company has voted in favour of a board reshuffle which will result in the departure of nine of its 11 members.

Only chief executive Edward Breen and Jack Krol, former chairman at DuPont, are to be nominated and backed for re-election.

 WATCH/LISTEN
 ON THIS STORY
BBC's Mark Gregory
"These are extraordinary, frivolous expenses"

Politics of regulation

Worldcom goes bust

Enron fall-out

Andersen laid low

FORUM
See also:

12 Sep 02 | Business
12 Sep 02 | Business
17 Jun 02 | Business
06 Jun 02 | Business
04 Jun 02 | Business
25 Feb 02 | Business
06 Feb 02 | Business
14 Feb 02 | Business
19 Feb 02 | Business
08 Feb 02 | Business
25 Apr 02 | Business
04 Jun 02 | Business
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes