Tyco said that senior executives led by Dennis Kozlowski, its former chief executive, were paid about $96m in a controversial mortgage forgiveness programme in a long-awaited report published on Tuesday.
The findings, disclosed in a Securities and Exchange Commission filing, also reveal in detail a range of payments and benefits received by senior Tyco executives. According to the company, the payments and benefits represented a “pattern of improper and illegal activity” which date back at least five years before Mr Kozlowski’s resignation and were hidden “from the board and its relevant committees”.
“The amount of money improperly diverted by Tyco’s former senior executives from the company to themselves is very small in comparison with Tyco’s total revenues and profits, but it is very large by any other relevant comparison; and the extent of the former executives’ misconduct has harmed Tyco’s reputation and credibility with investors, lenders and others,” said the filing.
Despite the allegations Tyco said it would not have to restate its earnings.
The report, prepared by Boies Schiller & Flexner, the law firm, revealed that Mr Kozlowski and Mark Swartz, former chief financial officer, received about $25m and $12m respectively in cash bonuses, relocation loans and benefits in the “ADT Automotive Bonus” misappropriations.
In The Key Employee Loan program, where senior officers borrowed more that they were allowed, the report said that Mr Kozlowski was the main “abuser”. By the end of 2001 Mr Kozlowski had borrowed more than $250m.
The report said that Mr Kozlowski used the KEL loans to “fund his personal lifestyle, including speculating in real estate, acquisition of antiques and furnishings for his properties (including properties purchased with unauthorized “relocation loans”) and the purchase and maintenance of his yacht.”