According to the Boston Globe, the education program will be designed to teach investors about the mechanics and risks of investing in corporate securities. Separately, an academic program on corporate governance will be set up within the University System of New Hampshire.
The Globe said that under the deal with the New Hampshire Bureau of Securities Regulation, Tyco does not admit to the allegations of mismanagement and lack of corporate control
Tyco chief executive L. Dennis Kozlowski and chief financial officer Mark Swartz, are accused of looting the company of millions of dollars, the Globe said. (See Shades of Enron at Tyco ).
The agreement alleges that top executives, including Kozlowski, Swartz, former chief counsel Mark Belnick, and former director Frank Walsh, misused corporate funds and engaged in transactions without proper approval, the Globe said.
In particular, the top executives misused Tyco programs that provide loans to key employees and to those who are required to relocate for company business, the newspaper said.
Oversight Governance Reports
The Globe said the settlement would require Tyco’s new CEO, Edward Breen, to demonstrate his stated commitment to strong oversight and spotless corporate ethics by submitting annual reports on the firm’s corporate governance for three years.
Mark Connolly, deputy secretary of state and director of securities regulation, said his office’s investigation hinged on standards of corporate behavior and director responsibility contained in state laws.
Though Tyco is nominally headquartered in Bermuda, its largest management office is in Exeter, New Hampshire and several senior officers, including Swartz and Kozlowski, had homes in the state.
“Tyco admits that 25% of the old board of directors is under some type of investigation or legal action,” Connolly told the Globe. “The corporation bears responsibility for that. Tyco wouldn’t be struggling for its corporate life if these transgressions didn’t happen.”
In a prepared statement yesterday, Breen said, ”We believe this consent agreement is in the best interests of our shareholders and employees and reflects the company’s commitment to a continued presence in New Hampshire.”
The settlement has no impact on other pending legal actions, including investigations by the US Securities and Exchange Commission, Manhattan District Attorney Robert Morgenthau, and the US attorney’s office in New Hampshire.