According to a Financial Times news report, Tyco is thinking about relocating its headquarters from Bermuda to the US. The Times said it is part of Tyco’s efforts to clean up its sullied corporate reputation and end doubts about its governance.
Jack Krol, the group’s lead director, said that Tyco “had to find the justification economically” for its incorporation in Bermuda, which dates from 1997, according to the Times.
Krol said reincorporating elsewhere would help remove any lingering concerns about the company’s accountability, following allegations that Kozlowski and Mark Swartz, former chief financial officer, looted more than $170 million from the company.
But Krol said that if a study of the issue found that it would cost Tyco much more to register in the US, the group would not leave Bermuda. “You don’t want to cut your nose off to spite your face,” he said.
Tyco confirmed the new management under chief executive officer Edward Breen, was “taking a fresh look” at the issue of where the company should be registered, but said it had “no current plans to make any change”.
Tyco’s incorporation in Bermuda has added to concerns that the conglomerate evaded both tax and regulatory scrutiny under Dennis Kozlowski, the former chief executive who was indicted last month on corruption charges.
US companies’ reincorporation offshore for tax reasons – so-called “corporate inversion” – has also become a hot US political issue since the September 11 terrorist attacks, with Congress accusing companies that make the move of a lack of patriotism.
In one controversial example, Connecticut-based toolmaker Stanley Works abandoned plans to reincorporate in Bermuda in August under intense political pressure. See Stanley Stays Put
Tyco incorporated on the Atlantic island five years ago following its reverse takeover of ADT, the security and alarm company already registered there.