Tyco is suing Mark Swartz, its former chief financial officer, demanding $400m in returned compensation and damages for illegally enriching himself and others with company funds.
Filed in New York federal court, the suit alleges Mr Swartz violated his fiduciary duty, helped other senior executives violate that same duty – including Dennis Kozlowski, former chief executive worked to commit fraud and conspired to cover up the crimes. Mr Swartz and Mr Kozlowski have been indicted by the New York district attorney for allegedly stealing $600m from the US conglomerate in undisclosed bonus schemes and illegal stock sales. The two have pleaded not guilty.
They are defendants in other actions, including civil actions by the Securities and Exchange Commission, as well as criminal tax charges in New Hampshire and other Tyco lawsuits.
Charles Stillman, attorney for Mr Swartz, said: “This action by Tyco appears to be nothing new, and no more than a public relations stunt.” He added that the issues in the lawsuit were subject to arbitration which, in fairness to his client, must wait until after Mr Swartz’s criminal case.
Tyco said that it started arbitration proceedings last October, but decided to bring the lawsuit after the mediator said the parties were unable to agree. The lawsuit alleges that Mr Swartz was already one of the best paid CFOs but conspired with Mr Kozlowski to use Tyco money and loans for activities ranging from real estate speculation to Elton John concert tickets.