Tyco Auditor Under ScrutinyOct 1, 2002 | AP Prosecutors have expanded their investigation of Tyco International Ltd. to include the company's auditor, PricewaterhouseCoopers Llp, according to a published report.
Investigators are trying to determine whether the nation's largest accounting firm knew about secret bonuses that were being paid to former Tyco executives as well as accounting practices that regulators have charged were used to hide the payments, The Wall Street Journal reported yesterday. The newspaper cited unidentified people with knowledge of the matter.
L. Dennis Kozlowski, Tyco's former chief executive, and Mark Swartz, its former chief financial officer, have been charged with enterprise corruption and grand larceny for allegedly stealing $600 million from the company. Both men have pleaded not guilty. They face up to 25 years in prison on each charge if convicted.
Steven Silber, a PricewaterhouseCoopers spokesman, told the newspaper that the firm was being questioned by the Manhattan district attorney's office about Tyco, but said "we have no reason to believe we will be anything but a provider of information for them." He told the Journal the firm couldn't comment on matters relating to Tyco because of "client confidentiality obligations." At issue in the widening probe is whether PricewaterhouseCoopers was aware of the executives' bonuses, the newspaper said.
Prosecutors are also investigating whether auditors knew that Tyco's annual proxy filings were inaccurate, and whether PricewaterhouseCoopers knew about the improper practices that Tyco allegedly used to hide the bonuses.
Arthur Andersen Llp, which audited Enron Corp.'s books, is the only major accounting firm to face criminal charges in the recent wave of corporate scandals. In June, a federal jury in Texas found Andersen guilty of obstruction of justice for shredding documents relating to Enron, the failed energy trader.