Ex-Tyco Official Says Firm Paid To Investigate Analyst's FiancéeJan 21, 2004 | Dow Jones Newswires
L. Dennis Kozlowski, Tyco International's ex-chairman and chief executive, arranged for a security firm to investigate the background of the fiancÃ©e of a favored analyst, Tyco's former head of investor relations said yesterday.
Brad McGee, Tyco's former investor-relations director, testified that Phua Young, a Merrill Lynch analyst, asked him in February or March 2001 about what company the Bermuda conglomerate used to conduct background checks.
Tyco paid about $20,000 to Kroll Associates in April 2001 on the approval of Kozlowski, according to an invoice shown by prosecutors.
Kozlowski and Mark Swartz, Tyco's former chief financial officer, are on trial in State Supreme Court in Manhattan, charged with improperly using Tyco funds to enrich themselves and others. Each faces up to 30 years in prison. They have denied wrongdoing.
McGee said Young told him that he was interested in information about a woman in Singapore and her parents.
McGee testified that Young was seen by Tyco executives as an analyst who knew the company well. Tyco executives were dissatisfied with the coverage of the previous Merrill Lynch analyst, Jeanne Terrile, McGee said.
In September 1999 Terrile was reassigned by Merrill Lynch and replaced by Young. Young soon upgraded the stock to Merrill's highest rating. "THIS IS A MUST OWN STOCK," Young told clients in an October 1999 e-mail.
Young was fired from Merrill in 2002 and was accused last year by the National Association of Securities Dealers of publishing misleading research on Tyco.
Kozlowski and Swartz, the former CFO, are accused of looting Tyco out of $600 million, including $430 million from selling company stock by misleading investors.